Bayesian Persuasion With Costly Information Acquisition

Ludmila Matysková (lmatysko@uni-bonn.de) and Alfonso Montes (alfonso.montes-sanchez@cyu.fr)

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: A sender choosing a signal to be disclosed to a receiver can often in fluence the receiver's actions. Is persuasion harder when the receiver has additional information sources? Does the receiver benefit from having them? We extend Bayesian persuasion to a receiver's acquisition of costly information. The game can be solved as a standard Bayesian persuasion under an additional constraint - the receiver never learns. The `threat' of learning hurts the sender. However, the outcome can also be worse for the receiver, in which case the receiver's possibility to gather additional information decreases social welfare. Furthermore, we propose a new solution method that does not rely directly on concavification, which is also applicable to standard Bayesian persuasion.

Keywords: Bayesian persuasion; Rational inattention; Costly information acquisition; Information design (search for similar items in EconPapers)
JEL-codes: D72 D81 D82 D83 (search for similar items in EconPapers)
Pages: 55
Date: 2021-04
New Economics Papers: this item is included in nep-gth, nep-isf, nep-mic, nep-ore and nep-upt
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Citations: View citations in EconPapers (14)

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