The Interval Structure of Optimal Disclosure

Research output: Contribution to journalArticlepeer-review

7 Scopus citations

Abstract

A sender persuades a receiver to accept a project by disclosing information about a payoff-relevant quality. The receiver has private information about the quality, referred to as his type. We show that the sender-optimal mechanism takes the form of nested intervals: each type accepts on an interval of qualities and a more optimistic type's interval contains a less optimistic type's interval. This nested-interval structure offers a simple algorithm to solve for the optimal disclosure and connects our problem to the monopoly screening problem. The mechanism is optimal even if the sender conditions the disclosure mechanism on the receiver's reported type.

Original languageEnglish (US)
Pages (from-to)653-675
Number of pages23
JournalEconometrica
Volume87
Issue number2
DOIs
StatePublished - Mar 2019

Keywords

  • Information design
  • nested intervals
  • privately informed receiver
  • sender-receiver games

ASJC Scopus subject areas

  • Economics and Econometrics

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