Blockchain Mediated Persuasion

37 Pages Posted: 23 Dec 2022 Last revised: 22 Aug 2023

See all articles by Kimon Drakopoulos

Kimon Drakopoulos

University of Southern California

Irene Lo

Stanford

Justin Mulvany

University of Southern California - Marshall School of Business

Date Written: December 12, 2022

Abstract

An ex-post informed Sender wishes to persuade a rational Bayesian Receiver to take a desired action, as in the classic Bayesian Persuasion model studied by Kamenica and Gentzkow (2011). However, we consider settings in which Sender cannot reliably commit to a signal mechanism. An alternative approach is to consider a trustworthy mediator that receives a reported state of the world from Sender and then, based on this report, generates a signal realization for Receiver. Such mediation can be implemented via costly blockchain technology. Surprisingly, we show that this cost differentiated mediation succeeds where free mediation fails. By requiring Sender to pay the mediator for different signal realizations, we can effectively incentivize them to truthfully report, which in turn allows for beneficial persuasion to take place.

Keywords: Bayesian persuasion, commitment, information design, smart contracts, blockchain

Suggested Citation

Drakopoulos, Kimon and Lo, Irene and Mulvany, Justin, Blockchain Mediated Persuasion (December 12, 2022). USC Marshall School of Business Research Paper Sponsored by iORB, Available at SSRN: https://ssrn.com/abstract=4300675 or http://dx.doi.org/10.2139/ssrn.4300675

Kimon Drakopoulos

University of Southern California ( email )

Marshall School of Business
Los Angeles, CA 90089
United States

Irene Lo

Stanford ( email )

United States

Justin Mulvany (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

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