BAYESIAN PERSUASION WITH PRIVATE EXPERIMENTATION

Mike Felgenhauer and Petra Loerke

International Economic Review, 2017, vol. 58, issue 3, 829-856

Abstract: This article studies a situation in which a sender tries to persuade a receiver by providing hard evidence that is generated by sequential private experimentation where the sender can design the properties of each experiment contingent on the experimentation history. The sender can selectively reveal as many outcomes as desired. We determine the set of equilibria that are not Pareto‐dominated. In each of these equilibria under private experimentation, the persuasion probability is lower and the receiver obtains access to higher quality information than under public experimentation. The decision quality improves in the sender's stakes.

Date: 2017
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