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Lost in Persuasion: Negative Reciprocity in Information Design

Author

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  • Eliaz, Kfir
  • Eilat, Ran

Abstract

We incorporate negative reciprocity into strategic information transmission, examining how a receiver's response to perceived manipulation influences optimal information design. In one setting, greater signal inaccuracy increases the likelihood that the receiver disregards it; in another, inaccuracy shifts the receiver's preferences unfavorably for the sender. In both cases, the revelation principle fails, yet we characterize the set of posterior beliefs on which an optimal signal is supported. While full revelation may be optimal in one setting, it is never so in the other. Our findings connect information design with behavioral economics, highlighting the implications of design-dependent preferences.

Suggested Citation

  • Eliaz, Kfir & Eilat, Ran, 2025. "Lost in Persuasion: Negative Reciprocity in Information Design," CEPR Discussion Papers 20295, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20295
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    File URL: https://cepr.org/publications/DP20295
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    Keywords

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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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