Bayesian Persuasion

Emir Kamenica, Matthew Gentzkow

NBER Working Paper No. 15540
Issued in November 2009
NBER Program(s):   IO   POL

When is it possible for one person to persuade another to change her action? We take a mechanism design approach to this question. Taking preferences and initial beliefs as given, we introduce the notion of a persuasion mechanism: a game between Sender and Receiver defined by an information structure and a message technology. We derive necessary and sufficient conditions for the existence of a persuasion mechanism that strictly benefits Sender. We characterize the optimal mechanism. Finally, we analyze several examples that illustrate the applicability of our results.

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Acknowledgments

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