Dynamic Information Design: Two Exa mples
Abstracts:
joint with Laura Doval:
We take as given the set
of agents, their set of actions, and their payoffs. We ask what distributi
ons over actions are consistent with the players playing according to some
extensive form. The main result of the paper is to show that a distribution
over outcomes is implementable as a Perfect Bayesian equilibrium (PBE) of
an admissible extensive form if, and only if, it is implementable as a PBE
of a canonical extensive form. The la er is an admissible extensive form, i
n which there is a randomization device that not only sends (private) recom
mendations to the agents, but also selects the order in which the agents mo
ve; moreover, subsequent recommendations can be made conditional on actions
already taken. This result strictly generalizes Aumann’s notion of correla
ted equilibrium, and Bergemann and Morris’ [3] notion of Bayes’ correlated
equilibrium.
joint with Martin Szydlowsk
i:
We study information as an incentive device in a dynamic moral haz
ard framework. An agent works on a project of uncertain difficulty, modeled
as duration of required effort. The principal knows the task difficulty an
d can provide information over time with the goal of inducing maximal effor
t. The optimal mechanism features moving goalposts: an initial disclosure m
akes the agent sufficiently optimistic that the task is easy in order to in
duce him to start working. If the task is indeed difficult the agent is tol
d this only after working long enough to put the difficult task within reac
h. Then the agent completes the difficult task even though he never would h
ave chosen to at the outset. The optimal dynamic disclosure policy improves
on any single-stage persuasion mechanism even though the fundamentals of t
he problem are all essentially static.