Experimental & Behavioural Economics Seminar - Li King King (Shenzhen University)

Room 315, Level 3, FBE Building, 111 Barry Street, Carlton

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Siqi Pan

siqi.pan@unimelb.edu.au

Title: Bayesian Persuasion and Reciprocity: Theory and Experiment

Abstract: In a Bayesian persuasion setting (Kamenica and Gentzkow, 2011), a sender persuades a receiver to take an action by designing and committing to disclose information about the receiver’s payoff of taking the action. We propose a model that incorporates reciprocity into the Bayesian persuasion setting, using the approach of Falk and Fischbacher (2006). The introduction of reciprocal concerns leads to a number of novel predictions. First, the receiver’s response changes continuously in the realized signals. Second, when the prior belief is more favorable, the receiver is more difficult to be persuaded, implying that the sender’s optimal persuasion strategy involves more informative disclosure. These predictions are supported by experimental data.