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Setting Interim Deadlines to Persuade

Author

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  • Maxim Senkov

Abstract

This paper studies the optimal design of self-reporting on the progress of a project by a rent-seeking agent reporting to a principal who is concerned with accomplishing the project before an exogenous deadline. The project has two stages: completing the first stage serves as a milestone and completing the second stage accomplishes the project. I show that if the project is sufficiently promising ex ante, then the agent commits to provide only the good news that the project is accomplished. If the project is not promising enough ex ante, the agent persuades the principal to start the funding by committing to provide not only good news but also the bad news that the milestone of the project has not been reached by an interim deadline.

Suggested Citation

  • Maxim Senkov, 2022. "Setting Interim Deadlines to Persuade," CERGE-EI Working Papers wp734, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    • Handle: RePEc:cer:papers:wp734
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    File URL: http://www.cerge-ei.cz/pdf/wp/Wp734.pdf
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    More about this item

    Keywords

    dynamic Bayesian persuasion; informational incentives; interim deadline; multistage project;
    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
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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