"Know thyself": information design with elusive receivers
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Date
2021
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Abstract
In some contexts, agents might be uncertain on how their chosen actions payoff. On the other side of the market, firms can use this uncertainty to induce their preferred actions. We develop a dynamic principal-agent model in which the agent strategically chooses whether or not (and to what extent) to inform herself on an unknown parameter of her utility function. Information on this parameter is valued tomorrow but is costly today. We find that for certain prior beliefs of said parameter, information acquisition is optimal. The principal has an objective function that depends on the agent's decision and knows the agent's optimal strategy. So, he intervenes in her chosen actions by designing distributions of posterior beliefs. In particular, we explore three instruments for the principal that determine (i) the precision of the information the agent acquires and (ii) the chances that the agent chooses to get informed.
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Tesis (Magíster en Economía)--Pontificia Universidad Católica de Chile, 2021