Persuasion with correlation neglect: a full manipulation result
Levy, G.
, Moreno de Barreda, I. & Razin, R.
(2022).
Persuasion with correlation neglect: a full manipulation result.
American Economic Review: Insights,
4(1), 123 - 138.
https://doi.org/10.1257/aeri.20210007
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.
| Item Type | Article |
|---|---|
| Copyright holders | © 2022 American Economic Association |
| Departments | LSE > Academic Departments > Economics |
| DOI | 10.1257/aeri.20210007 |
| Date Deposited | 05 Aug 2021 |
| Acceptance Date | 04 Aug 2021 |
| URI | https://researchonline.lse.ac.uk/id/eprint/111551 |
ORCID: https://orcid.org/0009-0006-7641-1668
ORCID: https://orcid.org/0009-0009-5169-0180