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Optimal Information Disclosure: Quantity vs. Quality

Author

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  • Anton Kolotilin

    () (School of Economics, the University of New South Wales)

Abstract

A sender chooses ex ante how her information will be disclosed to a privately informed receiver who then takes one of two actions. The sender wishes to maximize the probability that the receiver takes the desired action. The sender faces an ex ante quantity-quality tradeoff: sending positive messages more often (in terms of the sender's information) makes it less likely that the receiver will take the desired action (in terms of the receiver's information). Interestingly, the sender's and receiver's welfare is not monotonic in the precision of the receiver's private information: the sender may find it easier to influence a more informed receiver, and the receiver may suffer from having more precise private information. Necessary and sufficient conditions are derived for full and no information revelation to be optimal.

Suggested Citation

  • Anton Kolotilin, 2013. "Optimal Information Disclosure: Quantity vs. Quality," Discussion Papers 2013-19, School of Economics, The University of New South Wales.
  • Handle: RePEc:swe:wpaper:2013-19
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    File URL: http://research.economics.unsw.edu.au/RePEc/papers/2013-19.pdf
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    References listed on IDEAS

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    1. Golosov, Mikhail & Skreta, Vasiliki & Tsyvinski, Aleh & Wilson, Andrea, 2014. "Dynamic strategic information transmission," Journal of Economic Theory, Elsevier, vol. 151(C), pages 304-341.
    2. Luis Rayo & Ilya Segal, 2010. "Optimal Information Disclosure," Journal of Political Economy, University of Chicago Press, vol. 118(5), pages 949-987.
    3. Ivanov, Maxim, 2010. "Informational control and organizational design," Journal of Economic Theory, Elsevier, vol. 145(2), pages 721-751, March.
    4. Michael Ostrovsky & Michael Schwarz, 2010. "Information Disclosure and Unraveling in Matching Markets," American Economic Journal: Microeconomics, American Economic Association, vol. 2(2), pages 34-63, May.
    5. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
    6. Kolotilin, Anton, 2015. "Experimental design to persuade," Games and Economic Behavior, Elsevier, vol. 90(C), pages 215-226.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Kolotilin, Anton, 2015. "Experimental design to persuade," Games and Economic Behavior, Elsevier, vol. 90(C), pages 215-226.
    2. Alonso, Ricardo & Câmara, Odilon, 2016. "Bayesian persuasion with heterogeneous priors," Journal of Economic Theory, Elsevier, vol. 165(C), pages 672-706.
    3. Makoto Shimoji, 2016. "Rationalizable Persuasion," Discussion Papers 16/08, Department of Economics, University of York.
    4. Pak Hung Au, 2015. "Dynamic information disclosure," RAND Journal of Economics, RAND Corporation, vol. 46(4), pages 791-823, October.
    5. Ricardo Alonso & Odilon Câmara, 2016. "Persuading Voters," American Economic Review, American Economic Association, vol. 106(11), pages 3590-3605, November.
    6. Ayça Özdoðan, 2016. "A Survey of Strategic Communication and Persuasion," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 30(1), pages 1-21.
    7. Hedlund, Jonas, 2014. "Bayesian signaling," Working Papers 0577, University of Heidelberg, Department of Economics.
    8. Garfagnini, Umberto & Ottaviani, Marco & Sørensen, Peter Norman, 2014. "Accept or reject? An organizational perspective," International Journal of Industrial Organization, Elsevier, vol. 34(C), pages 66-74.
    9. Matthew Gentzkow & Emir Kamenica, 2016. "A Rothschild-Stiglitz Approach to Bayesian Persuasion," American Economic Review, American Economic Association, vol. 106(5), pages 597-601, May.

    More about this item

    Keywords

    information disclosure; persuasion; informed decision maker; two-way communication;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • 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

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