Persuasion with Correlation Neglect: A Full Manipulation Result

Gilat Levy, Ines Moreno de Barreda and Ronny Razin

American Economic Review: Insights, 2022, vol. 4, issue 1, 123-38

Abstract: We consider an information design problem in which a sender tries to persuade a receiver that has "correlation neglect," i.e., fails to understand that signals might be correlated. We show that a sender with unlimited number of signals can fully manipulate the receiver. Specifically, the sender can induce the receiver to hold any state-dependent posterior she wishes to. If the sender only wishes to induce a state-independent posterior, she can use fully correlated signals, but generally she needs to design more involved correlation structures.

JEL-codes: D82 D83 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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Working Paper: Persuasion with correlation neglect: a full manipulation result (2022)
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DOI: 10.1257/aeri.20210007

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