Events at CERGE-EI

Konuray Mutluer, Ph.D.

CERGE-EI, Czech Republic

Abstract: I study strategic communication between a partially informed receiver and an informed expert who is motivated by influence: she values her advice being followed as an end in itself. The central result is that, despite lacking commitment power, the equilibrium behavior of the expert is identical to the optimal commitment solution of the corresponding Bayesian persuasion problem. Thus, a desire for influence provides an alternative microfoundation for this canonical framework when commitment is not feasible. Beyond this equivalence, I show that the receiver's level of informedness determines the direction of causality between advice and action: as the receiver becomes more informed, the expert ceases to be an "opinion leader" and becomes a "follower". The receiver gains the most from communication when she is neither too ignorant nor too well informed.

Full Text: Influence Motivated Communication