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The Interval Structure of Optimal Disclosure
Author(s) -
Guo Yingni,
Shmaya Eran
Publication year - 2019
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.3982/ecta15668
Subject(s) - communication source , interval (graph theory) , stochastic game , quality (philosophy) , monopoly , computer science , type (biology) , simple (philosophy) , private information retrieval , mathematical economics , complete information , mathematical optimization , outcome (game theory) , mathematics , microeconomics , economics , computer network , computer security , combinatorics , ecology , philosophy , epistemology , biology
A sender persuades a receiver to accept a project by disclosing information about a payoff‐relevant quality. The receiver has private information about the quality, referred to as his type. We show that the sender‐optimal mechanism takes the form of nested intervals: each type accepts on an interval of qualities and a more optimistic type's interval contains a less optimistic type's interval. This nested‐interval structure offers a simple algorithm to solve for the optimal disclosure and connects our problem to the monopoly screening problem. The mechanism is optimal even if the sender conditions the disclosure mechanism on the receiver's reported type.