Seminars

Persuasion with Correlation Neglect

Economics & Decision Sciences

Speaker: Ronny Razin
LSE

9 March 2017 - T017 - From 11:00 am to 12:00 pm


We consider a persuasion problem in which the receiver has correlation neglect, that is, he is not aware that the signals he obtains arise from a joint distribution function with potential correlation. We show how a strategic sender, who cannot alter the marginal distributions of signals, will design a joint information structure with correlation to best persuade the receiver. Specifically, the sender will in general negatively correlate good news and positively correlate bad news across these signals. We also show that when the sender is able to choose the marginal distributions (which are known to the receiver), he will design marginal information structures which are informative but never too much. When the receiver is not necessarily paying full attention to all signals, the sender will reduce the number of available signals, while otherwise the sender would prefer to have as many signals as possible in his disposal. Finally we look at the welfare implications of persuasion from the point of view of the receiver. We compare our basic model to three different benchmarks; the case of independent signals, the case of competition among two senders and the case of a monopolist facing a mixed audience in which the receiver is rational with certain probability. We find that independence is always better than facing a malevolent sender who favours the action that is ex-ante less appealing to the receiver. However facing a malevolent sender who favours the ex-ante preferred action does sometimes dominate independence. Competition among two senders is also sometimes worse than facing a monopolist who favours the ex-ante preferred action. Finally, a receiver with correlation neglect prefers sometimes to be surrounded by naive receivers.

title : TBA

Economics & Decision Sciences

Speaker: Harry Di Pei
Northwestern

12 February 2019


title : TBA

Economics & Decision Sciences

Speaker: François Geerolf
UCLA

18 December 2018


title : TBA

Economics & Decision Sciences

Speaker: Marko Tervio
Aalto

13 December 2018


Title : TBA

Economics & Decision Sciences

Speaker: Olivier Deschenes
UCSB

29 November 2018


title : TBA

Economics & Decision Sciences

Speaker: Emmanuele Tarantino
Mannheim University

27 November 2018



JavaScriptSettings