Optimal persuasion via bi-pooling

Itai Arieli (), Yakov Babichenko (), Rann Smorodinsky () and Takuro Yamashita
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Itai Arieli: Technion–Israel Institute of Technology
Yakov Babichenko: Technion–Israel Institute of Technology
Rann Smorodinsky: Technion–Israel Institute of Technology

Theoretical Economics, 2023, vol. 18, issue 1

Abstract: Mean-preserving contractions are critical for studying Bayesian models of information design. We introduce the class of bi-pooling policies, and the class of bi-pooling distributions as their induced distributions over posteriors. We show that every extreme point in the set of all mean-preserving contractions of any given prior over an interval takes the form of a bi-pooling distribution. By implication, every Bayesian persuasion problem with an interval state-space admits an optimal bi-pooling distribution as a solution, and conversely, for every bi-pooling distribution, there is a Bayesian persuasion problem for which that distribution is the unique solution

Keywords: Bayesian persuasion; mean preserving contraction; bi-pooling; information disclosure; price function; signaling; extreme points (search for similar items in EconPapers)
JEL-codes: C72 D82 D83 (search for similar items in EconPapers)
Date: 2023-01-18
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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