Bayesian Persuasion And Information Disclosures Essay

2105 WordsMay 20, 20169 Pages
Bayesian Persuasion and Information Disclosures: Extensions of Kamenica-Gentzkow Model Literature Review Information disclosure happens in many economic and social settings when one or several persons or organizations communicate with other agents involved in a strategic interaction. The optimal mode of information transmission between a self-interested sender and a group of potentially interacting decision-making receivers, who form their beliefs and take actions based on information provided, has been well studied. Most notably, Kamenica and Gentzkow (2011) examined the case of persuasion and developed a fundamental methodology to solve a broad class of strategic experimentation problems when players have common beliefs. They showed that the sender can be strictly better off than without persuasion by committing to a persuasion mechanism which generates noisy signals to the receivers. Most recent literature has been using their 'Bayesian Persuasion” model (referred to as KG model hereafter) to investigate optimal disclosure regimes. KG model of design of information system and optimal levels of disclosures between the parties is broadly adaptable to various settings: politicians competing for voters, prosecutors persuading judges/jurors, bank regulators communicating with investors , schools choosing students, CEO influencing board of directors/shareholders, CFO bargaining with divisional managers, firms being audited by auditors and pharmaceutical companies advertising
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