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Persuasion with Correlation Neglect: A Full Manipulation Result

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  • Gilat Levy
  • Inés Moreno de Barreda
  • Ronny Razin

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

  • Gilat Levy & Inés Moreno de Barreda & Ronny Razin, 2022. "Persuasion with Correlation Neglect: A Full Manipulation Result," American Economic Review: Insights, American Economic Association, vol. 4(1), pages 123-138, March.
    • Handle: RePEc:aea:aerins:v:4:y:2022:i:1:p:123-38
    DOI: 10.1257/aeri.20210007
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    References listed on IDEAS

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    1. Dirk Bergemann & Stephen Morris, 2019. "Information Design: A Unified Perspective," Journal of Economic Literature, American Economic Association, vol. 57(1), pages 44-95, March.
    2. Benjamin Enke & Florian Zimmermann, 2019. "Correlation Neglect in Belief Formation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(1), pages 313-332.
    3. Robert J. Aumann, 1995. "Repeated Games with Incomplete Information," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011476, April.
    4. Andrew Ellis & Michele Piccione, 2017. "Correlation Misperception in Choice," American Economic Review, American Economic Association, vol. 107(4), pages 1264-1292, April.
    5. Benjamin Golub & Matthew O. Jackson, 2012. "How Homophily Affects the Speed of Learning and Best-Response Dynamics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(3), pages 1287-1338.
    6. Ido Kallir & Doron Sonsino, 2009. "The Neglect of Correlation in Allocation Decisions," Southern Economic Journal, John Wiley & Sons, vol. 75(4), pages 1045-1066, April.
    7. Robert F. Bordley, 1982. "A Multiplicative Formula for Aggregating Probability Assessments," Management Science, INFORMS, vol. 28(10), pages 1137-1148, October.
    8. Itai Arieli & Yakov Babichenko & Fedor Sandomirskiy & Omer Tamuz, 2020. "Feasible Joint Posterior Beliefs," Papers 2002.11362, arXiv.org, revised Dec 2020.
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    Cited by:

    1. Andrew T Little, 2023. "Bayesian explanations for persuasion," Journal of Theoretical Politics, , vol. 35(3), pages 147-181, July.
    2. Maxim Senkov & Toygar T. Kerman, 2024. "Changing Simplistic Worldviews," CERGE-EI Working Papers wp773, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    3. Kfir Eliaz & Ran Spiegler, 2024. "News Media as Suppliers of Narratives (and Information)," Papers 2403.09155, arXiv.org.
    4. Ran Spiegler, 2023. "Behavioral Causal Inference," Papers 2305.18916, arXiv.org.
    5. Itai Arieli & Yakov Babichenko & Fedor Sandomirskiy, 2023. "Feasible Conditional Belief Distributions," Papers 2307.07672, arXiv.org, revised Nov 2024.

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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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