Essays in Information Economics

Abstract

Information is crucial for making decisions under uncertainty. This dissertation explores how information is designed or elicited by a principal aiming to implement a certain objective.

Chapters 1 and 2 study information design in cases when there is no commitment to reveal information. In Chapter 1, I analyze optimal evidence acquisition in a game of voluntary disclosure. A sender seeks hard evidence to persuade a receiver to take a certain action, but there is uncertainty about whether evidence has been obtained. When the probability of obtaining evidence is low, I show that the optimal evidence structure is a binary certification: all it reveals is whether the state of the world is above or below a certain threshold. When binary structures are optimal, higher uncertainty leads to less pooling at the bottom because the sender uses binary certification to commit to disclose evidence more often.

Chapter 2 (co-authored with Elliot Lipnowski and Doron Ravid) studies how credibility affects persuasion. A sender uses a weak institution to disseminate information to persuade a receiver. Specifically, the weaker is the institution, the higher is the probability that its report reflects the sender’s agenda rather than the officially announced protocol. We show that increasing this probability can benefit the receiver and can lead to a discontinuous drop in the sender’s payoffs. To derive our results, we geometrically characterize the sender’s highest equilibrium payoff, which is based on the concave envelope of her capped value function.

Finally, Chapter 3 (co-authored with Franz Ostrizek) explores monopolistic screening with frame-dependent valuations. A principal designs an extensive-form decision problem with frames at each stage. The optimal mechanism has a simple three-stage structure and uses changes in framing (high-low-high) to induce dynamic inconsistency and thereby reduce information rents. To achieve this, the principal offers unchosen decoy contracts. Sophisticated consumers correctly anticipate that if they deviated, they would choose a decoy, which they want to avoid in the low frame. This allows the principal to eliminate some incentive constraints. With naive consumers, the principal can perfectly screen by cognitive type and extract full surplus from naifs.