Bayesian Persuasion With Private Experimentation

Abstract

This article studies a situation in which a sender tries to persuade a receiver by providing hard evidence that is generated by sequential private experimentation where the sender can design the properties of each experiment contingent on the experimentation history. The sender can selectively reveal as many outcomes as desired. We determine the set of equilibria that are not Pareto-dominated. In each of these equilibria under private experimentation, the persuasion probability is lower and the receiver obtains access to higher quality information than under public experimentation. The decision quality improves in the sender's stakes. * Manuscript . 2 Once a regression method is described and the database is public, manipulation is not possible. We make a similar case for logical arguments in footnote 3. Such arguments have persuasive power, and, hence, they can be viewed as decision relevant. Naturally, they are also imperfect.3 Felgenhauer and Schulte (2014) interpret, e.g., logical arguments as decision relevant hard information that result from experimentation: If the assumptions underlying a logical argument are revealed, then they cannot be manipulated. The deductions are logical and logic cannot be manipulated. Logical arguments have persuasive power; therefore, they can be viewed as signals about a decision relevant state of the world. The signals are imperfect, as the underlying assumptions do not cover every real world aspect. A thought experiment (i.e., drawing a set of assumptions and making a deduction) yields a signal. For such arguments the assumption that they are acquired in private by running a series of thought experiments and selectively revealed for persuasion is natural. 829 C (2017) by the

The Face Value of Arguments With and Without Manipulation

“…Skeptical beliefs are not always helpful and, in general, communication is not fully revealing. Most closely related are Felgenhauer and Schulte (2014) and Felgenhauer and Loerke (2017), in the following FS and FL, respectively.…”

“…Other contributions, as this article, focus on private experimentation, where the receiver cannot observe the experimentation history (e.g., Brocas and Carillo, 2007; Henry, 2009; Felgenhauer and Schulte, 2014; Felgenhauer and Loerke, 2017). Private experimentation with selective information revelation is a natural assumption for logical arguments or a regression analysis.…”

“…Skeptical beliefs as in Milgrom and Roberts (1986) induce unravelling and the receiver obtains access to the same information as under public experimentation. If private experimentation is sequential instead, that is, the decision to continue experimenting is history dependent (as in Celik, 2003; Felgenhauer and Schulte, 2014; Felgenhauer and Loerke, 2017; and here), then the receiver in general cannot deduce the actual number of experiments, even though she anticipates the experimentation plan. Skeptical beliefs are not always helpful and, in general, communication is not fully revealing.…”

Endogenous Persuasion with Costly Verification

“…As arguments play a role in many decision environments and the properties of arguments can be influenced, it is important to understand how the design flexibility affects decision making. The papers with these features that are most closely related are KG, GK, and Felgenhauer and Loerke (), hereafter referred to as FL.…”

Bias and Negligence with Freedom of Information

“…If disclosure reveals that D acted contrary to the socially optimal decision rule (1) he still su¤ers the punishment for bias p. We assume that D su¤ers a small nuisance cost " of undergoing an investigation, which may be interpreted as the inconvenience of responding to M's request, even if he is cleared of wrongdoing. 5 Given " an informed D may prefer to reveal his information rather than risk investigation. We assume " to be negligible and generally omit it from the calculations, but it appears in proofs and discussions whenever it breaks an indi¤erence tie.…”