Persuasion with Strategic Reporting

Abstract

We introduce strategic result reporting in Bayesian persuasion. A sender conducts an experiment to acquire information to influence a receiver’s action. After committing to an experiment, the sender privately observes its realized result and strategically reports a message. This reporting incurs a cost that depends on the realized result and the message reported and exhibits strictly decreasing differences. We characterize the optimal experiment choice for the sender and identify a sufficient condition for the sender to choose the fully informative experiment. Furthermore, we provide a condition on the cost structure that is sufficient for the sender to choose an experiment whose results cannot be fully revealed to the receiver through reporting. Finally, we examine comparative statics with respect to the cost intensity.

Keywords: Bayesian persuasion, Strategic Manipulation, Reporting Cost, Information Transmission