Persuasion with unknown beliefs

Svetlana Kosterina (svetlana.kosterina@gmail.com)
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Svetlana Kosterina: Department of Economics, University of Pittsburgh

Theoretical Economics, 2022, vol. 17, issue 3

Abstract: A sender designs an information structure to persuade a receiver to take an action. The sender is ignorant about the receiver's prior, and evaluates each information structure using the receiver's prior that is the worst for the sender. I characterize the optimal information structures in this environment. I show that there exists an optimal signal with two realizations, characterize the support of the signal realization recommending approval and show that the optimal signal is a hyperbola. The lack of knowledge of the receiver's prior causes the sender to hedge her bets: the optimal signal induces the high action in more states than in the standard model, albeit with a lower probability. Increasing the sender's ignorance can hurt both the sender and the receiver.

Keywords: Bayesian persuasion; robust mechanism design (search for similar items in EconPapers)
JEL-codes: D8 (search for similar items in EconPapers)
Date: 2022-07-14
References: View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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