Markovian persuasion with two states

Galit Ashkenazi-Golan, Penélope Hernández, Zvika Neeman and Eilon Solan

Games and Economic Behavior, 2023, vol. 142, issue C, 292-314

Abstract: This paper addresses the question of how to best communicate information over time in order to influence an agent's belief and induced actions in a model with a binary state of the world that evolves according to a Markov process, and with a finite number of actions. We characterize the sender's optimal message strategy in the limit, as the length of each period decreases to zero. We show that the limit optimal strategy is myopic for beliefs smaller than the invariant distribution of the underlying Markov process. For beliefs larger than the invariant distribution, the optimal policy is more elaborate and involves both silence and splitting of the receiver's beliefs; it is not myopic.

Keywords: Bayesian persuasion; Information design; Markov games; Repeated games with incomplete information (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:142:y:2023:i:c:p:292-314

DOI: 10.1016/j.geb.2023.08.001

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