Dynamic Persuasion With Outside Information
49 Pages Posted: 26 Apr 2018 Last revised: 19 Nov 2019
Date Written: November 15, 2019
A principal seeks to persuade an agent to accept an offer of uncertain value before a deadline expires. The principal can generate information, but exerts no control over exogenous outside information. The combined effect of the deadline and outside information creates incentives for the principal to keep uncertainty high in the first periods so as to persuade the agent close to the deadline. We characterize the conditions under which the agent makes his final decision in the first period as well as those in which the agent sometimes waits until the deadline, and derive the welfare implications of this analysis.
Keywords: Information Design, Bayesian Persuasion, Dynamic Games
JEL Classification: C72, C73, D83
Suggested Citation: Suggested Citation