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Annual Review of Economics

Volume 11, 2019

Bayesian Persuasion and Information Design

Abstract

A school may improve its students’ job outcomes if it issues only coarse grades. Google can reduce congestion on roads by giving drivers noisy information about the state of traffic. A social planner might raise everyone's welfare by providing only partial information about solvency of banks. All of this can happen even when everyone is fully rational and understands the data-generating process. Each of these examples raises questions of what is the (socially or privately) optimal information that should be revealed. In this article, I review the literature that answers such questions.

Keyword(s): communication, JEL D02, JEL D82, manipulation of beliefs, rating systems
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/content/journals/10.1146/annurev-economics-080218-025739
2019-08-02
2025-04-29
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/content/journals/10.1146/annurev-economics-080218-025739
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Bayesian Persuasion and Information Design
Annual Review of Economics 11, 249 (2019); https://doi.org/10.1146/annurev-economics-080218-025739
/content/journals/10.1146/annurev-economics-080218-025739
/content/journals/10.1146/annurev-economics-080218-025739
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