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Information Design

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  • Taneva, Ina A

Abstract

There are two ways of creating incentives for interacting agents to behave in a desired way. One is by providing appropriate payoff incentives, which is the subject of mechanism design. The other is by choosing the information that agents observe, which we refer to as information design. We consider a model of symmetric information where a designer chooses and announces the information structure about a payoff relevant state. The interacting agents observe the signal realizations and take actions which affect the welfare of both the designer and the agents. We characterize the general finite approach to deriving the optimal information structure for the designer - the one that maximizes the designer's ex ante expected utility subject to agents playing a Bayes Nash equilibrium. We then apply the general approach to a symmetric two state, two agent, and two actions environment in a parameterized underlying game and fully characterize the optimal information structure: it is never strictly optimal for the designer to use conditionally independent private signals; the optimal information structure may be a public signal or may consist of correlated private signals. Finally, we examine how changes in the underlying game affect the designer's maximum payoff. This exercise provides a joint mechanism/information design perspective.

Suggested Citation

  • Taneva, Ina A, 2015. "Information Design," SIRE Discussion Papers 2015-50, Scottish Institute for Research in Economics (SIRE).
  • Handle: RePEc:edn:sirdps:638
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    File URL: http://hdl.handle.net/10943/638
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    References listed on IDEAS

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    1. Goltsman, Maria & Pavlov, Gregory, 2011. "How to talk to multiple audiences," Games and Economic Behavior, Elsevier, vol. 72(1), pages 100-122, May.
    2. Yun Wang, 2015. "Bayesian Persuasion with Multiple Receivers," WISE Working Papers 2015-03-24, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    3. Lehrer, Ehud & Rosenberg, Dinah & Shmaya, Eran, 2013. "Garbling of signals and outcome equivalence," Games and Economic Behavior, Elsevier, vol. 81(C), pages 179-191.
    4. Peski, Marcin, 2008. "Comparison of information structures in zero-sum games," Games and Economic Behavior, Elsevier, vol. 62(2), pages 732-735, March.
    5. Lehrer, Ehud & Rosenberg, Dinah & Shmaya, Eran, 2010. "Signaling and mediation in games with common interests," Games and Economic Behavior, Elsevier, pages 670-682.
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    Cited by:

    1. Bergemann, Dirk & Morris, Stephen, 2017. "Belief-free rationalizability and informational robustness," Games and Economic Behavior, Elsevier, pages 744-759.
    2. Dirk Bergemann & Stephen Morris, 2016. "Information Design, Bayesian Persuasion, and Bayes Correlated Equilibrium," American Economic Review, American Economic Association, vol. 106(5), pages 586-591, May.
    3. Bergemann, Dirk & Morris, Stephen, 2017. "Information Design: A Unified Perspective," CEPR Discussion Papers 11867, C.E.P.R. Discussion Papers.
    4. James Best & Daniel Quigley, 2016. "Persuasion for the Long-Run," Economics Papers 2016-W12, Economics Group, Nuffield College, University of Oxford.

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