Bayesian Persuasion with Costly Information Acquisition
A sender who chooses a signal to reveal to a receiver can often influence receiver’s subsequent actions. Is the persuasion harder when the receiver has own sources of information? We consider a Bayesian persuasion model extended to receiver’s endogenous information acquisition under an entropy based cost commonly used in rational inattention. An optimal sender’s signal can be computed from standard Bayesian persuasion subject to an additional constraint: the receiver never gathers own information. We further determine a finite set of sender’s signals satisfying the additional constraint, in which some optimal signal must be contained. The set is characterized by linear conditions using receiver’s utility and information cost parameters. We show that the ‘threat’ of additional learning has a disciplinary effect on the sender. However, this threat can hurt not only the sender, but also the receiver.
Date: 16 October 2017, 12:15 (Monday, 2nd week, Michaelmas 2017)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room B
Speaker: Ludmila Matyskova (CERGE-EI)
Organising department: Department of Economics
Part of: Postdoc & DPhil Workshop
Booking required?: Not required
Audience: Members of the University only
Editors: Erin Saunders, Anne Pouliquen