Working Paper: NBER ID: w15540
Authors: Emir Kamenica; Matthew Gentzkow
Abstract: When is it possible for one person to persuade another to change her action? We take a mechanism design approach to this question. Taking preferences and initial beliefs as given, we introduce the notion of a persuasion mechanism: a game between Sender and Receiver defined by an information structure and a message technology. We derive necessary and sufficient conditions for the existence of a persuasion mechanism that strictly benefits Sender. We characterize the optimal mechanism. Finally, we analyze several examples that illustrate the applicability of our results.
Keywords: No keywords provided
JEL Codes: D83; K41; L15; M37
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| sender's actions (Y60) | receiver's beliefs (D83) |
| receiver's beliefs (D83) | sender's benefits from persuasion (D91) |
| sender's benefits from persuasion (D91) | sender's utility (L97) |
| receiver's action remains constant in a neighborhood of beliefs (D80) | sender benefits from persuasion (D91) |
| concavity of sender's payoff in relation to receiver's beliefs (D83) | no disclosure of information is optimal (D82) |
| convexity of sender's payoff in relation to receiver's beliefs (C73) | full disclosure is optimal (G40) |