Abstract. A sender commissions a study to persuade a receiver, but influences the report with some state-dependent probability. We show that increasing this probability can benefit the receiver and can lead to a discontinuous drop in the sender’s payoffs. We also examine a public-persuasion setting, where we show the sender especially prefers her report to be immune to influence in bad states. To derive our results, we geometrically characterize the sender’s highest equilibrium payoff, which is based on the concave envelope of her capped value function.
SSRN June 18, 2019
Abstract. We analyze screening with frame-dependent valuation. A monopolist firm designs an extensive-form decision problem with frames at each stage. Consumers are sophisticated: they correctly anticipate their future choices, but lack commitment. The optimal extensive form has a simple three-stage structure: After an initial “sales pitch”, consumers are given time to consider the o er and then presented with an extended tailored menu if they come back. Framing is used by the principal to create and exploit dynamic inconsistency to reduce information rents. If there are both sophisticated and naive consumers, the principal can perfectly screen by cognitive type and extract full surplus from naifs.
PDF December 25, 2018