Lost in Persuasion: Negative Reciprocity in Information Design

Kfir Eliaz and Ran Eilat

No 20295, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We incorporate negative reciprocity into strategic information transmission, examining how a receiver's response to perceived manipulation influences optimal information design. In one setting, greater signal inaccuracy increases the likelihood that the receiver disregards it; in another, inaccuracy shifts the receiver's preferences unfavorably for the sender. In both cases, the revelation principle fails, yet we characterize the set of posterior beliefs on which an optimal signal is supported. While full revelation may be optimal in one setting, it is never so in the other. Our findings connect information design with behavioral economics, highlighting the implications of design-dependent preferences.

Keywords: Negative-reciprocity; Information design (search for similar items in EconPapers)
JEL-codes: D82 D91 (search for similar items in EconPapers)
Date: 2025-05
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