Assortative Information Disclosure

Abstract

We consider a standard persuasion problem in which the receiver’s action and the state of the world are both one-dimensional. Fully characterizing optimal signals when utilities are non-linear is a daunting task. Instead, we develop a general approach to understanding a key qualitative property of optimal signals: their assortative structure, which describes the overall pattern of what states are pooled together. We derive simple conditions—driven by intuitive economic properties, such as supermodularity and submodularity of preferences—for the optimality of positive and negative assortative patterns of information disclosure. Our approach unifies a wide range of previous findings and generates new applications.

Keywords: persuasion, information design, assortative matching

JEL Classification: C78, D82, D83