Bayesian Persuasion and Information Design

Posted: 4 Sep 2019

Date Written: August 2019

Abstract

A school may improve its students’ job outcomes if it issues only coarse grades. Google can reduce congestion on roads by giving drivers noisy information about the state of traffic. A social planner might raise everyone's welfare by providing only partial information about solvency of banks. All of this can happen even when everyone is fully rational and understands the data-generating process. Each of these examples raises questions of what is the (socially or privately) optimal information that should be revealed. In this article, I review the literature that answers such questions.

Suggested Citation

Kamenica, Emir, Bayesian Persuasion and Information Design (August 2019). Annual Review of Economics, Vol. 11, pp. 249-272, 2019. Available at SSRN: https://ssrn.com/abstract=3445890 or http://dx.doi.org/10.1146/annurev-economics-080218-025739

Emir Kamenica (Contact Author)

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

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