Conferences at Department of Economics, University of Toronto, Canadian Economic Theory Conference 2024

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Persuasion and Matching: Optimal Productive Transport

Anton Kolotilin*, Alexander Wolitzky, Roberto Corrao

Building: Rotman School of Management
Room: Room 1065
Last modified: 2024-05-02

Abstract


We consider general Bayesian persuasion problems where the receiver's utility is single-peaked in a one-dimensional action. We show that a signal that pools at most two states in each realization is always optimal, and that such \emph{pairwise} signals are the only solutions under a non-singularity condition (the \emph{twist condition}). Our core results provide conditions under which riskier prospects induce higher or lower actions, so that the induced action is \emph{single-dipped} or \emph{single-peaked} on each set of nested prospects. We also provide conditions for the optimality of either full disclosure or \emph{negative assortative disclosure}, where all prospects are nested. Methodologically, our results rely on novel duality and complementary slackness theorems. Our analysis extends to a general problem of assigning one-dimensional inputs to productive units, which we call \emph{optimal productive transport}. This problem covers additional applications including club economies (assigning workers to firms, or students to schools), robust option pricing (assigning future asset prices to price distributions), and partisan gerrymandering (assigning voters to districts).

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