Persuasion for the Long-Run
We examine the limits of persuasion when credibility today is sustained by the incentive of future credibility. We model this as a long-run sender with private information playing a cheap talk game against short-run receivers where there is a noisy signal at the end of each period on the sender’s ex-ante private information. We compare our model of long-run persuasion to the persuasion baseline of committed persuasion, where the sender can commit to strategies at the stage game. Long-run persuasion can only achieve the optimal committed persuasion payoffs if the optimal committed persuasion strategy is “honest”. When the optimal committed strategy is not honest the use of either a weak communication mechanism called a ‘Coin and Cup’ (CnC) or a standard communication mechanism (a mediator) expands the Pareto frontier of the game. For sufficiently patient senders, a CnC mechanism replicates committed persuasion payoffs when the sender’s information is perfectly observed ex-post, whereas a mediator can get arbitrarily close whenever systematic deviation from truth telling is asymptotically identified. The advantage of the CnC over the mediator is that it is relatively easy to manufacture and implement. Finally, we show how ‘emergent communication mechanisms’ arise when there are many simultaneous receivers.
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