Persuasion with Correlation Neglect: A Full Manipulation Result
American Economic Review: Insights
vol. 4,
no. 1, March 2022
(pp. 123-38)
Abstract
We consider an information design problem in which a sender tries to persuade a receiver that has "correlation neglect," i.e., fails to understand that signals might be correlated. We show that a sender with unlimited number of signals can fully manipulate the receiver. Specifically, the sender can induce the receiver to hold any state-dependent posterior she wishes to. If the sender only wishes to induce a state-independent posterior, she can use fully correlated signals, but generally she needs to design more involved correlation structures.Citation
Levy, Gilat, Inés Moreno de Barreda, and Ronny Razin. 2022. "Persuasion with Correlation Neglect: A Full Manipulation Result." American Economic Review: Insights, 4 (1): 123-38. DOI: 10.1257/aeri.20210007Additional Materials
JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness