The Simple Economics of Optimal Persuasion

By Piotr Dworczak, Giorgio Martini. Journal of Political Economy, 2019

223 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Management Science and Operations Research

View Paper: https://www.semanticscholar.org/paper/9e43b7ff0dca6963e373093391ca668705d318ca

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In Economics and Econometrics

1. Philipp Strack
2. Benny Moldovanu

In Management Science and Operations Research

1. Philipp Strack
2. Benny Moldovanu
3. Andreas Kleiner
4. Roman M. Sheremeta
5. Hans K. Hvide

Citations in the corpus

• Extreme Points and Majorization: Economic Applications (2020, background): “It is therefore an affine-closed function (see Definition 2 in Dworczak and Martini, 2019).”