Download This PaperBayesian Persuasion with Costly Messages
54 Pages Posted: 2 Jan 2019 Last revised: 15 Jan 2021
Date Written: November 1, 2019
Abstract
We study a model of Bayesian persuasion in which the Sender publicly designs a signal structure, privately observes the signal realization and then reports a message to the Receiver at a cost that depends on the signal realization. We provide sufficient conditions for full information revelation by the Sender, and these conditions are satisfied under many commonly studied communication games. Under these conditions, the Sender's (lack of) commitment in the persuasion problem is quantified as a communication cost to sustain the chosen belief distribution. The value of persuasion is shown to be the Sender's utility under his most preferred equilibrium within the set of equilibria with full information revelation in the given communication game. We apply this approach to study test design and a lobbyist's incentive to generate and truthfully report new information to policy-makers.
Keywords: Bayesian persuasion, costly messages, partial commitment
JEL Classification: D83, D82, D72, M37
Suggested Citation: Suggested Citation
Carnegie Mellon University - David A. Tepper School of Business ( email )
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