Persuasion with Limited Communication Capacity
58 Pages Posted: 8 Dec 2017 Last revised: 5 Sep 2019
Date Written: December 15, 2017
We consider a Bayesian persuasion problem where the persuader and the decision maker communicate through an imperfect channel that has a fixed and limited number of messages and is subject to exogenous noise. We provide an upper bound on the payoffs the persuader can secure by communicating through the channel. We also show that the bound is tight, i.e., if the persuasion problem consists of a large number of independent copies of the same base problem, then the persuader can achieve this bound arbitrarily closely by using strategies that tie all the problems together. We characterize this optimal payoff as a function of the information-theoretic capacity of the communication channel.
JEL Classification: C72, D82, D83
Suggested Citation: Suggested Citation