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Persuasion and Welfare

Author

Listed:
  • Laura Doval
  • Alex Smolin

Abstract

Information policies such as scores, ratings, and recommendations are increasingly shaping society’s choices in high-stakes domains. We provide a framework to study the welfare implications of information policies on a population of heterogeneous individuals. We define and characterize the Bayes welfare set, consisting of the population’s utility profiles that are feasible under some information policy. The Pareto frontier of this set can be recovered by a series of standard Bayesian persuasion problems. We provide necessary and sufficient conditions under which an information policy exists that Pareto dominates the no-information policy. We illustrate our results with applications to data leakage, price discrimination, and credit ratings.

Suggested Citation

  • Laura Doval & Alex Smolin, 2024. "Persuasion and Welfare," Journal of Political Economy, University of Chicago Press, vol. 132(7), pages 2451-2487.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/729067
    DOI: 10.1086/729067
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    Cited by:

    1. Philipp Strack & Kai Hao Yang, 2025. "Non-Discriminatory Personalized Pricing," Cowles Foundation Discussion Papers 2447, Cowles Foundation for Research in Economics, Yale University.
    2. Itai Arieli & Yakov Babichenko & Atulya Jain & Rann Smorodinsky, 2025. "Efficiency in Games with Incomplete Information," Papers 2510.12508, arXiv.org, revised Dec 2025.
    3. Yi Liu & Yang Yu, 2024. "Money Burning Improves Mediated Communication," Papers 2411.19431, arXiv.org.
    4. Ichihashi, Shota & Smolin, Alex, 2025. "Data provision to an informed seller," Games and Economic Behavior, Elsevier, vol. 153(C), pages 131-144.
    5. Philipp Strack & Kai Hao Yang, 2025. "Non-Discriminatory Personalized Pricing," Papers 2506.20925, arXiv.org.
    6. Aköz, Kemal Kıvanç & Samsonov, Arseniy, 2025. "Information agreements," Journal of Economic Theory, Elsevier, vol. 229(C).
    7. Itai Arieli & Yakov Babichenko & Atulya Jain & Rann Smorodinsky, 2026. "Efficiency in Games with Incomplete Information," ECONtribute Discussion Papers Series 390, University of Bonn and University of Cologne, Germany.
    8. Philipp Strack & Kai Hao Yang, 2024. "Privacy‐Preserving Signals," Econometrica, Econometric Society, vol. 92(6), pages 1907-1938, November.

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