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Persuasion with correlation neglect: a full manipulation result

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  • Levy, Gilat
  • Moreno de Barreda, Inés
  • Razin, Ronny

Abstract

We consider an information design problem in which a sender tries to persuade a receiver that has "correlation neglect", i.e. fails to understand that signals might be correlated. We show that a sender with unlimited number of signals can fully manipulate the receiver. Specifically, the sender can induce the receiver to hold any state-dependent posterior she wishes to. If the sender only wishes to induce a state-independent posterior, she can use fully correlated signals, but generally she needs to design more involved correlation structures.

Suggested Citation

  • Levy, Gilat & Moreno de Barreda, Inés & Razin, Ronny, 2022. "Persuasion with correlation neglect: a full manipulation result," LSE Research Online Documents on Economics 111551, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:111551
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    File URL: http://eprints.lse.ac.uk/111551/
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    References listed on IDEAS

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    6. Robert J. Aumann, 1995. "Repeated Games with Incomplete Information," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011476, December.
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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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