Who is afraid of Bayesian persuasion?

Luc Lauwers and Patrick Van Cayseele

No 625063, Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: Bayesian persuasion (Kamenica and Gentzkow 2011) refers to the optimal signalling of a Sender with informational advantage over the Receiver, under the constraint that the expected posterior (over the state space) equals the common prior. In the basic example of a judicial system with a prosecutor (Sender) and a judge (Receiver) who needs to convict or acquit a defendant, the mechanism of Bayesian persuasion entails the detriment of the third party (absent in the model): innocent subjects who get convicted suffer from this optimal signalling scheme. If the judge is concerned about errors of convicting innocent defendants, or about the overall sustainability of the judicial system, outcomes different from Kamenica and Gentzkow (2011) may arise.

Pages: 12
Date: 2018-04-18
New Economics Papers: this item is included in nep-mic
Note: paper number DPS18.05
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Published in Department of Economics. Discussion paper series,

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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:625063

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