Bureaucratic norms and dynamic Bayesian persuasion

A developer seeks to persuade a sequence of two short-tenured officials to award her a contract. Officials maximize social welfare, and the second official follows a bureaucratic norm requiring reliance only on evidence presented directly to him. Thus, Bayesian inference is restricted when the first official defers the decision, because the second does not observe the first official’s evidence. The first official can exploit this restriction to induce more informative experiments. When the static value of persuasion is zero for the bureaucracy but positive for the developer, two outcomes arise: either the first official decides immediately with more information, increasing social welfare, or delay occurs, with delay costs offsetting informational benefits. In both cases, the developer’s expected payoff is lower than under static persuasion. With unrestricted inference, an intuitive PBE replicates the static outcome, so the norm may increase social welfare and never reduces it relative to the static benchmark.