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Optimal Information Disclosure: Quantity vs. Quality

Anton Kolotilin ()

No 2013-19, Discussion Papers from School of Economics, The University of New South Wales

Abstract: A sender chooses ex ante how her information will be disclosed to a privately informed receiver who then takes one of two actions. The sender wishes to maximize the probability that the receiver takes the desired action. The sender faces an ex ante quantity-quality tradeoff: sending positive messages more often (in terms of the sender's information) makes it less likely that the receiver will take the desired action (in terms of the receiver's information). Interestingly, the sender's and receiver's welfare is not monotonic in the precision of the receiver's private information: the sender may find it easier to influence a more informed receiver, and the receiver may suffer from having more precise private information. Necessary and sufficient conditions are derived for full and no information revelation to be optimal.

Keywords: information disclosure; persuasion; informed decision maker; two-way communication (search for similar items in EconPapers)
JEL-codes: C72 D81 D82 D83 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2013-07
New Economics Papers: this item is included in nep-cdm, nep-cta and nep-mic
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