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Optimal Information Transmission

Wei Ma ()
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Wei Ma: Department of Economics, University of Pretoria

No 201530, Working Papers from University of Pretoria, Department of Economics

Abstract: This paper addresses the issue of how a given piece of information should be transmitted from a better-informed doctor to an ill-informed patient. The information to be transmitted is expressed as a probability distribution on a space of the patient’s possible health states. For a formal analysis of the issue we develop a two-person dynamic game, in which the doctor sends a sequence of messages to the patient to inform him of his health state, and the patient, after receiving each message, chooses an action in an attempt to improve upon his current health status. We study some standard properties of the equilibria of this game; in particular, we show that it has a subgame perfect equilibrium.

Keywords: Information transmission; Dynamic game theory; Subgame perfect equilibrium (search for similar items in EconPapers)
JEL-codes: D73 D83 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2015-05
New Economics Papers: this item is included in nep-gth, nep-hea and nep-mic
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