Markovian persuasion with two states

Ashkenazi-Golan, Galit ORCID: 0000-0003-3896-4131, Hernández, Penélope, Neeman, Zvika and Solan, Eilon (2023) Markovian persuasion with two states. Games and Economic Behavior, 142. 292 - 314. ISSN 0899-8256

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Abstract

This paper addresses the question of how to best communicate information over time in order to influence an agent's belief and induced actions in a model with a binary state of the world that evolves according to a Markov process, and with a finite number of actions. We characterize the sender's optimal message strategy in the limit, as the length of each period decreases to zero. We show that the limit optimal strategy is myopic for beliefs smaller than the invariant distribution of the underlying Markov process. For beliefs larger than the invariant distribution, the optimal policy is more elaborate and involves both silence and splitting of the receiver's beliefs; it is not myopic.

Item Type:	Article
Official URL:	https://www.sciencedirect.com/journal/games-and-ec...
Additional Information:	© 2023 The Author(s)
Divisions:	Mathematics
Subjects:	H Social Sciences > HB Economic Theory Q Science > QA Mathematics
JEL classification:	D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search; Learning; Information and Knowledge; Communication; Belief
Date Deposited:	10 Aug 2023 13:39
Last Modified:	20 Dec 2024 00:49
URI:	http://eprints.lse.ac.uk/id/eprint/119970

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