Optimal Dynamic Information Provision

Speaker
Eilon Solan
Date
16/12/2014 - 12:30 - 11:00Add To Calendar 2014-12-16 11:00:00 2014-12-16 12:30:00 Optimal Dynamic Information Provision Abstract: We study a dynamic model of information provision. A state of nature evolves according to a Markov chain. An informed advisor decides how much information to provide to an uninformed decision maker, so as to influence his short-term decisions. We deal with a stylized class of situations, in which the decision maker has a risky action and a safe action, and the payoff to the advisor only depends on the action chosen by the decision maker. The greedy disclosure policy is the policy which, at each round, minimizes the amount of information being disclosed in that round, under the constraint that it maximizes the current payoff of the advisor. We prove that the greedy policy is optimal in many cases – but not always. אוניברסיטת בר-אילן - Department of Economics Economics.Dept@mail.biu.ac.il Asia/Jerusalem public
Affiliation
Tel Aviv University
Abstract

Abstract: We study a dynamic model of information provision. A state of nature evolves according to a Markov chain. An informed advisor decides how much information to provide to an uninformed decision maker, so as to influence his short-term decisions. We deal with a stylized class of situations, in which the decision maker has a risky action and a safe action, and the payoff to the advisor only depends on the action chosen by the decision maker. The greedy disclosure policy is the policy which, at each round, minimizes the amount of information being disclosed in that round, under the constraint that it maximizes the current payoff of the advisor. We prove that the greedy policy is optimal in many cases – but not always.

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Last Updated Date : 09/12/2014