Incentives through information
Ina Taneva (University of Edinburgh)
Broadly speaking, agents' behavior is determined by preferences and by information. Hence, a designer with commitment power can influence agents' behavior by changing preferences through contingent incentives (contract/mechanism design) or by changing the informational environment by providing information (information design). This lecture provides an overview of the seminal papers and recent developments in the rapidly growing literature on Bayesian persuasion (single agent) and information design (multiple agents). We will consider models where the different ingredients of the commitment assumption are modified (e.g., a designer who can change the messages before sending them, or alternatively, an informed designer who commits to the information structure after having observed the state) and analyze the resulting implications. Additionally, some topics at the exciting intersection of mechanism and information design will betouched upon. The papers surveyed will also provide a plethora of applications to finance, political economy, industrial organization, and personnel economics, among others.
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