Learning Manipulation Through Information Dissemination

Operations Research, Accepted

58 Pages Posted: 16 Oct 2019 Last revised: 7 Sep 2021

See all articles by Jussi Keppo

Jussi Keppo

National University of Singapore (NUS) - NUS Business School

Michael Jong Kim

Sauder School of Business, University of British Columbia

Xinyuan Zhang

Sauder School of Business, University of British Columbia

Date Written: August 14, 2021

Abstract

We study optimal manipulation of a Bayesian learner through adaptive provisioning of information. The problem is motivated by settings in which a firm can disseminate possibly biased information at a cost, to influence the public’s belief about a hidden parameter related to the firm’s payoffs. For example, firms advertise to sell products. We study a sequential optimization model in which the firm dynamically decides on the quantity and content of information sent to the public, aiming to maximize its expected total discounted profits over an infinite horizon. We solve the associated Bayesian dynamic programming equation, and explicitly characterize the optimal manipulation policy in closed-form. The explicit solution allows us to further characterize the evolution of the public’s posterior belief under such manipulation over time. We also extend our analysis to consider the public as partially-Bayesian social learners who rely on public reviews to resist manipulation. We show that the public asymptotically learns the truth in this extended setting.

Keywords: Bayesian dynamic programming, learning, misinformation, information disclosure, social learning, information design

JEL Classification: D83, C61

Suggested Citation

Keppo, Jussi and Kim, Michael Jong and Zhang, Xinyuan, Learning Manipulation Through Information Dissemination (August 14, 2021). Operations Research, Accepted, Available at SSRN: https://ssrn.com/abstract=3465030 or http://dx.doi.org/10.2139/ssrn.3465030

Jussi Keppo (Contact Author)

National University of Singapore (NUS) - NUS Business School ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://https://www.jussikeppo.com

Michael Jong Kim

Sauder School of Business, University of British Columbia ( email )

Xinyuan Zhang

Sauder School of Business, University of British Columbia ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

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