Center for Social Information Sciences (CSIS) Seminar

Friday, December 3, 2021
12:00pm to 1:00pm
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Dabney Hall, Lounge
Persuading a Rationally Inattentive Agent
Alexander Bloedel, Linde Institute Postdoctoral Scholar Research Associate in Economics, Caltech,

Abstract: How should information be disclosed to an inattentive audience? We develop a model in which a Sender transmits signals about an uncertain state to a rationally inattentive Receiver, who privately bears a mutual information cost (Sims (2003)) to process these signals before taking an action. Information disclosure serves dual purposes: to persuade Receiver when preferences over actions are misaligned, and to manipulate Receiver's attention, which is subject to moral hazard. The latter friction causes the standard Obedience Principle to fail: Sender cannot simply provide an action recommendation because Receiver would sometimes ignore it. We characterize optimal disclosure in a canonical binary-action setting using a first-order approach. Under aligned preferences, full disclosure is generally suboptimal: Sender instead attracts Receiver's attention by pooling intermediate- and high-stakes states (in which taking the correct action is most valuable) while fully revealing low-stakes states (in which it is least valuable). Under misaligned preferences, Sender may also distract Receiver by providing detailed information about states in which their preferred actions differ. We show that higher attention costs tend to induce more informative disclosure and that, when Sender lacks commitment power, her incentive to "exaggerate" hinders communication. We also explore broader modeling issues, such as the importance of Sender's "language" when Receiver's cost function differs from mutual information, and the difference between Receiver learning about Sender's signal ("communication") vs. directly about the state ("delegated information acquisition").

Written with Ilya Segal.

For more information, please contact Mary Martin by phone at 626-395-4571 or by email at mmartin@caltech.edu.