Divide and Inform: Rationing Information to Facilitate Persuasion

57 Pages Posted: 19 Jan 2017 Last revised: 6 Feb 2018

See all articles by Beatrice Michaeli

Beatrice Michaeli

University of California, Los Angeles (UCLA)

Date Written: June 15, 2013

Abstract

This article develops a Bayesian persuasion model examining a manager’s incentives to gather information when the manager can disseminate this information selectively to interested parties (“users”) and when the objectives of the manager and the users are not perfectly aligned. The model predicts that, if the manager can choose the subset of users to receive the information, then the manager may gather more precise information. The article identifies conditions under which a regime that allows managers to grant access to information selectively maximizes aggregate information. Strikingly, this happens when the objectives of managers and users are sufficiently misaligned. This finding is robust to variations of the model such as information acquisition cost, unobservable precision, sequential noisy actions taken by the users and delayed choice of the subset of users in “the know.” These results call into doubt the common belief that forcing managers to provide unrestricted access to information to all potential users is always beneficial.

Keywords: Bayesian persuasion, ex ante commitment to information design, endogenous quality of information, verifiable messages, selective dissemination, persuasion with multiple receivers

JEL Classification: D80, D83, D60

Suggested Citation

Michaeli, Beatrice, Divide and Inform: Rationing Information to Facilitate Persuasion (June 15, 2013). The Accounting Review, 2017, Vol. 92(5). Available at SSRN: https://ssrn.com/abstract=2899962

Beatrice Michaeli (Contact Author)

University of California, Los Angeles (UCLA) ( email )

D415 Anderson Complex
Los Angeles, CA 90095
United States

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