Persuasion via Weak Institutions
63 Pages Posted: 10 May 2018 Last revised: 6 Dec 2019
Date Written: December 5, 2019
A sender commissions a study to persuade a receiver, but influences the report with some state-dependent probability. We show that increasing this probability can benefit the receiver and can lead to a discontinuous drop in the sender’s payoffs. We also examine a public-persuasion setting, where we show the sender especially prefers her report to be immune to influence in bad states. To derive our results, we geometrically characterize the sender’s highest equilibrium payoff, which is based on the concave envelope of her capped value function.
Keywords: persuasion, weak institutions, cheap talk, belief-based approach, information design
JEL Classification: D82, D83, D73, D02
Suggested Citation: Suggested Citation