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Bayesian persuasion by a privately informed sender

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  • Hedlund, Jonas

Abstract

This paper introduces private sender information in a game of Bayesian persuasion with monotonic sender preferences. I derive properties of increasing differences related to the precision of signals and use these to characterize the set of equilibria selected by the D1 criterion. These equilibria are either separating (i.e., the sender's choice of signal reveals his private information to the receiver) or fully disclosing (i.e., the outcome of the sender's chosen signal fully reveals the payoff-relevant state). Which of these two cases occurs is determined by the optimality properties of fully disclosing signals. If full disclosure is optimal for all sender types, then the equilibrium is fully disclosing. Otherwise, the equilibrium is fully separating, and incentive compatibility requires the sender to use signals that are strictly more informative than the ones that would be used under symmetric information. Therefore, when full disclosure is suboptimal, the sender incurs a cost in comparison to the symmetric information case, whereas the receiver benefits from better information.

Suggested Citation

  • Hedlund, Jonas, 2017. "Bayesian persuasion by a privately informed sender," Journal of Economic Theory, Elsevier, vol. 167(C), pages 229-268.
  • Handle: RePEc:eee:jetheo:v:167:y:2017:i:c:p:229-268
    DOI: 10.1016/j.jet.2016.11.003
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    Citations

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    Cited by:

    1. Dinev, Nikolay, 2017. "Voluntary Bankruptcy as Preemptive Persuasion," Economics Series 334, Institute for Advanced Studies.
    2. Jonas Hedlund & T. Florian Kauffeldt & Malte Lammert, 2021. "Persuasion under ambiguity," Theory and Decision, Springer, vol. 90(3), pages 455-482, May.
    3. Jesse Bull & Joel Watson, 2019. "Statistical evidence and the problem of robust litigation," RAND Journal of Economics, RAND Corporation, vol. 50(4), pages 974-1003, December.
    4. Cheng Li, 2020. "Centralized policymaking and informational lobbying," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 54(4), pages 527-557, April.
    5. Frédéric Koessler & Vasiliki Skreta, 2023. "Informed Information Design," Journal of Political Economy, University of Chicago Press, vol. 131(11), pages 3186-3232.
    6. Skreta, Vasiliki & Koessler, Frédéric, 2021. "Information Design by an Informed Designer," CEPR Discussion Papers 15709, C.E.P.R. Discussion Papers.
    7. Claude Fluet & Thomas Lanzi, 2021. "Cross-Examination," Working Papers of BETA 2021-40, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    8. Alonso, Ricardo & Câmara, Odilon, 2018. "On the value of persuasion by experts," Journal of Economic Theory, Elsevier, vol. 174(C), pages 103-123.
    9. Kerman, Toygar & Herings, P. Jean-Jacques & Karos, Dominik, 2020. "Persuading Strategic Voters," Research Memorandum 004, Maastricht University, Graduate School of Business and Economics (GSBE).
    10. Elias Tsakas & Nikolas Tsakas & Dimitrios Xefteris, 2021. "Resisting persuasion," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(3), pages 723-742, October.
    11. Shaofei Jiang, 2024. "Costly Persuasion by a Partially Informed Sender," Papers 2401.14087, arXiv.org, revised Feb 2024.
    12. Andriy Zapechelnyuk, 2023. "On the equivalence of information design by uninformed and informed principals," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 76(4), pages 1051-1067, November.
    13. Tsakas, Elias & Tsakas, Nikolas, 2021. "Noisy persuasion," Games and Economic Behavior, Elsevier, vol. 130(C), pages 44-61.
    14. Oleg Muratov, 2020. "Entrepreneur-Investor Information Design," Diskussionsschriften dp2014, Universitaet Bern, Departement Volkswirtschaft.
    15. Bizzotto, Jacopo & Rüdiger, Jesper & Vigier, Adrien, 2020. "Testing, disclosure and approval," Journal of Economic Theory, Elsevier, vol. 187(C).
    16. Panagiota Papadimitri & Ansgar Wohlschlegel, 2020. "Lobbying and Enforcement: Theory and Application to Bank Regulation," Working Papers 2020-01, Swansea University, School of Management.
    17. Arianna Degan & Ming Li, 2021. "Persuasion with costly precision," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(3), pages 869-908, October.
    18. Yanlin Chen & Jun Zhang, 2019. "Signaling by Bayesian Persuasion and Pricing Strategy. Short title: Disclosure and Price Signaling," Working Paper Series 2019/14, Economics Discipline Group, UTS Business School, University of Technology, Sydney.
    19. Farzaneh Farhadi & Demosthenis Teneketzis, 2022. "Dynamic Information Design: A Simple Problem on Optimal Sequential Information Disclosure," Dynamic Games and Applications, Springer, vol. 12(2), pages 443-484, June.
    20. Emir Kamenica & Kyungmin Kim & Andriy Zapechelnyuk, 2021. "Bayesian persuasion and information design: perspectives and open issues," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(3), pages 701-704, October.

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    More about this item

    Keywords

    Bayesian persuasion; Signaling; Information transmission;
    All these keywords.

    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
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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