Inform and Persuade

Joshua Bißbort, Daniel Heyen and Soheil Shayegh

No 12482, CESifo Working Paper Series from CESifo

Abstract: Advice plays a central role in health, personal finance, and energy-efficiency decisions. We study how a benevolent expert should design verifiable advice—such as whether to commission a diagnostic test of different accuracy—when the agent is behaviorally biased, either neglecting payoff-relevant considerations or updating beliefs in a systematic, non-Bayesian way. The expert both informs the agent about underlying risk and persuades the agent away from choices driven by bias. In a Bayesian persuasion framework with a binary safe-versus-risky decision and moderate (monotone) distortions, we show that the expert’s payoff need not be monotone in informativeness: intermediate information can reduce welfare relative to no information. Nonetheless, full disclosure remains optimal.

Keywords: expert advice; risky choice; Bayesian persuasion; information design; behavioral bias; non-Bayesian updating; full disclosure (search for similar items in EconPapers)
JEL-codes: D03 D81 D82 D83 I18 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12482

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