Conferences at Department of Economics, University of Toronto, Canadian Economic Theory Conference 2018

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Persuasion via Weak Institutions

Elliot Lipnowski*, Doron Ravid, Denis Shishkin

Date: 2018-05-12 5:00 pm – 5:30 pm
Last modified: 2018-04-27

Abstract


A sender (S) publicly commissions a study by an institution to persuade a receiver (R). A study consists of a research plan and an official reporting rule. S privately learns the research's outcome, and also whether she can influence the report. Under influenced reporting, S can privately change the report to a message of her choice. Otherwise, the official reporting rule applies. We geometrically characterize S's highest equilibrium value, and examine how optimal persuasion varies with the probability that reporting is uninfluenced -- S's ``credibility''. We identify two phenomena: (1) R can strictly benefit from a reduction in S's credibility; (2) small decreases in credibility often lead to large payoff losses for S, but this typically will not happen when S is almost fully credible.

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