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Bayesian signaling

Hedlund, Jonas

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Abstract

This paper introduces private sender information into a sender-receiver game of Bayesian persuasion with monotonic sender preferences. I derive properties of increasing differences related to the precision of signals and use these to fully characterize the set of equilibria robust to the intuitive criterion. In particular, all such equilibria are either separating, i.e., the sender's choice of signal reveals his private information to the receiver, or fully disclosing, i.e., the outcome of the sender's chosen signal fully reveals the payoff-relevant state to the receiver. Incentive compatibility requires the high sender type to use sub-optimal signals and therefore generates a cost for the high sender type in comparison to a full information benchmark in which the receiver knows the sender's type. The receiver prefers the equilibrium outcome over this benchmark for large classes of monotonic sender preferences.

Item Type: Working paper
Series Name: Discussion Paper Series, University of Heidelberg, Department of Economics
Volume: 577
Place of Publication: Heidelberg
Date Deposited: 11 Dec 2014 08:40
Date: November 2014
Number of Pages: 31
Faculties / Institutes: The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics
Subjects: 330 Economics
Uncontrolled Keywords: Bayesian Persuasion, Signaling.
Schriftenreihe ID: Discussion Paper Series / University of Heidelberg, Department of Economics
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