Learning Manipulation Through Information Dissemination

41 Pages Posted: 16 Oct 2019

See all articles by Jussi Keppo

Jussi Keppo

National University of Singapore - NUS Business School

Michael Jong Kim

Sauder School of Business, University of British Columbia

Xinyuan Zhang

Sauder School of Business, University of British Columbia

Date Written: October 6, 2019

Abstract

We study optimal manipulation of a Bayesian learner through adaptive provisioning of information. The problem is motivated by settings in which a firm can disseminate possibly biased information at a cost, to influence the public’s belief about a hidden parameter related to the firm’s payoffs. For example, firms advertise to sell products. We study a sequential optimization model in which the firm dynamically decides on the quantity and content of information sent to the public, aiming to maximize its expected total discounted profits over an infinite horizon. We solve the associated Bayesian dynamic programming equation, and explicitly characterize the optimal manipulation policy in closed-form. The explicit solution allows us to further characterize the evolution of the public’s posterior belief under such manipulation over time. We also extend our analysis to consider a learner who can acquire extra information from a source other than the firm, restricting the manipulation in an indirect manner.

Keywords: Bayesian dynamic programming, learning, misinformation, information disclosure, deceptive advertising, propaganda

JEL Classification: D83, C61

Suggested Citation

Keppo, Jussi and Kim, Michael Jong and Zhang, Xinyuan, Learning Manipulation Through Information Dissemination (October 6, 2019). Available at SSRN: https://ssrn.com/abstract=3465030 or http://dx.doi.org/10.2139/ssrn.3465030

Jussi Keppo (Contact Author)

National University of Singapore - NUS Business School ( email )

1 Business Link
Singapore, 117592
Singapore

Michael Jong Kim

Sauder School of Business, University of British Columbia ( email )

Vancouver
Canada

Xinyuan Zhang

Sauder School of Business, University of British Columbia ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

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