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Persuasion with Coarse Communication

Yunus Aybas () and Eray Turkel

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Abstract: We study games of Bayesian persuasion where communication is coarse. This model captures interactions between a sender and a receiver, where the sender is unable to fully describe the state or recommend all possible actions. The sender always weakly benefits from more signals, as it increases their ability to persuade. However, more signals do not always lead to more information being sent, and the receiver might prefer outcomes with coarse communication. As a motivating example, we study advertising where a larger signal space corresponds to better targeting ability for the advertiser, and show that customers may prefer less targeting. In a class of games where the sender's utility is independent from the state, we show that an additional signal is more valuable to the sender when the receiver is more difficult to persuade. More generally, we characterize optimal ways to send information using limited signals, show that the sender's optimization problem can be solved by searching within a finite set, and prove an upper bound on the marginal value of a signal. Finally, we show how our approach can be applied to settings with cheap talk and heterogeneous priors.

Date: 2019-10, Revised 2021-09
New Economics Papers: this item is included in nep-dcm, nep-gth, nep-mic and nep-upt
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