Information Design: The Random Posterior Approach
Date: 2016-05-06 2:00 pm – 2:30 pm
Last modified: 2016-06-02
Abstract
Information affects behavior by affecting beliefs. Information design
studies how to disclose information to a group of players to incentivize
them to behave in a desired way. This paper is a theoretical investigation
of information design, culminating with a representation theorem and a
fundamental application of it. We adopt a random posterior perspective,
viewing information design as belief manipulation rather than information
disclosure. The representation theorem shows that it is as if the designer
manipulated beliefs in a specific way, giving form to the random posterior
approach in games, as did Kamenica and Gentzkow (2011) in one-agent
problems. The representation theorem can also be implemented in specific
problems, for example in the beauty contest and multiple-agent problems.
We focus on an application that we call the Mother's Problem.