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Optimal disclosure of information to privately informed agents

Author

Listed:
  • Candogan, Ozan

    (Booth School of Business, University of Chicago)

  • Strack, Philipp

    (Department of Economics, Yale University)

Abstract

We study information design with multiple privately informed agents who interact in a game. Each agent's utility is linear in a real-valued state. We show that there always exists an optimal mechanism which is laminar partitional and bound its ``complexity''. For each type profile, such a mechanism partitions the state space and recommends the same action profile within a partition element. Furthermore, the convex hulls of any two partition elements are such that either one contains the other or they have an empty intersection. We highlight the value of screening: the ratio of the optimal and the best payoff without screening can be equal to the number of types. Along the way, we shed light on the solutions to optimization problems over distributions subject to a mean-preserving contraction constraint and additional side constraints, which might be of independent interest.

Suggested Citation

  • Candogan, Ozan & Strack, Philipp, 2023. "Optimal disclosure of information to privately informed agents," Theoretical Economics, Econometric Society, vol. 18(3), July.
    • Handle: RePEc:the:publsh:5173
    as

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    References listed on IDEAS

    as
    1. Dirk Bergemann & Stephen Morris, 2013. "Robust Predictions in Games With Incomplete Information," Econometrica, Econometric Society, vol. 81(4), pages 1251-1308, July.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bayesian persuasion; information design; partitional signals; private information;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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