SMU SOE Seminar Series (May 9, 2024): Persuasion and Matching: Optimal Productive Transport

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TOPIC:

PERSUASION AND MATCHING: OPTIMAL PRODUCTIVE TRANSPORT

ABSTRACT We consider general Bayesian persuasion problems where the receiver’s utility is single-peaked in a one-dimensional action. We show that a signal that pools at most two states in each realization is always optimal, and that such pairwise signals are the only solutions under a non-singularity condition (the twist condition). Our core results provide conditions under which riskier prospects induce higher or lower actions, so that the induced action is single-dipped or single-peaked on each set of nested prospects. We also provide conditions for the optimality of either full disclosure or negative assortative disclosure, where all prospects are nested. Methodologically, our results rely on novel duality and complementary slackness theorems. Our analysis extends to a general problem of assigning one-dimensional inputs to productive units, which we call optimal productive transport. This problem covers additional applications including club economies (assigning workers to f irms, or students to schools), robust option pricing (assigning future asset prices to price distributions), and partisan gerrymandering (assigning voters to districts). Keywords: Bayesian Persuasion, Information Design, First-Order Approach, Optimal Transport, Duality, Complementary Slackness, Pairwise Signal, Single-Dipped Signal, Negative Assortative Disclosure, Club Economies, Option Pricing and Gerrymandering. JEL Codes: C78, D82, D83. Click here to view the CV. Click here to view the paper.
		PRESENTER Anton Kolotilin University of New South Wales
		RESEARCH FIELDS Microeconomic Theory Information Economics
		DATE: 9 May 2024 (Thursday)
		TIME: 4pm - 5.30pm
		VENUE: Meeting Room 5.1, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903

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