òòò½Íø Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Disclosure to a Psychological Audience
òòò½Íø Journal: Microeconomics
vol. 10,
no. 4, November 2018
(pp. 67–93)
Abstract
We study how a benevolent expert should disclose information to an agent with psychological concerns. We first provide a method to compute an optimal information policy for many psychological traits. The method suggests, for instance, that an agent suffering from temptation à la Gul and Pesendorfer (2001) should not know what he is missing, thereby explaining observed biases as an optimal reaction to costly self-control. We also show that simply recommending actions is optimal when the agent is intrinsically averse to information but has instrumental uses for it. This result, which circumvents the failure of the Revelation Principle in psychological environments, simplifies disclosure and informs the debate regarding mandated disclosure.Citation
Lipnowski, Elliot, and Laurent Mathevet. 2018. "Disclosure to a Psychological Audience." òòò½Íø Journal: Microeconomics 10 (4): 67–93. DOI: 10.1257/mic.20160247Additional Materials
JEL Classification
- D11 Consumer Economics: Theory
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making