Abstract
We propose a price-theoretic approach to Bayesian persuasion by establishing an analogy between the sender’s problem and finding Walrasian equilibria of a persuasion economy. The sender, who acts as a consumer, purchases posterior beliefs at their prices using the prior distribution as her endowment. A single firm has the technology to garble the state. Welfare theorems provide a verification tool for optimality of a persuasion scheme and characterize the structure of prices that support the optimal solution. This approach yields a tractable solution method for persuasion problems in which the sender’s utility depends only on the expected state.
Original language | English (US) |
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Pages (from-to) | 1993-2048 |
Number of pages | 56 |
Journal | Journal of Political Economy |
Volume | 127 |
Issue number | 5 |
DOIs | |
State | Published - Oct 1 2019 |
ASJC Scopus subject areas
- Economics and Econometrics