Bayesian Persuasion and Information Design

Байесианское убеждение и дизайн информации
Emir Kamenica
2019-05-13

Bayesian persuasioncoarse gradinginformation designnoisy signaling of traffic statepartial disclosure of bank solvency
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.
1
Applications include issuing coarse grades, providing noisy traffic information, and restricting bank solvency information, showing diverse domains where information design matters.
2
Coarse or partial information disclosure can improve outcomes (e.g., student job outcomes, traffic congestion, social welfare) even when agents are fully rational and understand the data-generating process.
3
Optimal information provision can be socially or privately determined and may involve withholding or adding noise to information to achieve better aggregate outcomes.
4
The literature surveyed characterizes what information should be revealed to optimize objectives across different settings.

Information structure / signals revealed to decision makers (coarse or noisy grades, traffic signals, partial solvency information)

Optimal design and strategic effects of information disclosure (Bayesian persuasion) on agents' actions and social/private welfare

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2019-05-13
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Emir Kamenica
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