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Endogenous Persuasion with Costly Verification

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  • Mike Felgenhauer

Abstract

In this paper, I study a situation in which a sender tries to persuade a receiver with evidence that is generated via public or private experimentation. Under public experimentation, any experimental outcome is revealed, and under private experimentation the sender can hide adverse outcomes. The sender can design the properties of the experiments. The receiver chooses whether to verify at a cost the design of the experiment with which the revealed outcome was generated. I find that communication breaks down under public experimentation if there is no restriction on the experiment's design, and that persuasion is possible under private experimentation.

Suggested Citation

  • Mike Felgenhauer, 2019. "Endogenous Persuasion with Costly Verification," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(3), pages 1054-1087, July.
    • Handle: RePEc:bla:scandj:v:121:y:2019:i:3:p:1054-1087
    DOI: 10.1111/sjoe.12290
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    References listed on IDEAS

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    9. Mike Felgenhauer & Elisabeth Schulte, 2014. "Strategic Private Experimentation," American Economic Journal: Microeconomics, American Economic Association, vol. 6(4), pages 74-105, November.
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    Cited by:

    1. Mike Felgenhauer & Petra Loerke, 2017. "Bayesian Persuasion With Private Experimentation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(3), pages 829-856, August.
    2. Mike Felgenhauer & Fangya Xu, 2021. "The Face Value Of Arguments With And Without Manipulation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(1), pages 277-293, February.

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