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Bayesian Persuasion.

Design a publicly known signal policy while keeping the receiver’s Bayesian incentives visible.

Interactive experimentintuitiveField note ·
INTERACTIVE EXPERIMENT / P42

Bayesian Persuasion

Design a publicly known signal policy while keeping the receiver’s Bayesian incentives visible.

TEST THE MECHANISM

A project is good with prior probability 0.3. Investing pays the receiver +1 if good and −1 if bad, so the receiver invests at posterior at least 0.5, including ties. The sender wants investment in either state and commits publicly to a signal rule.

0100
Committed signal policy
StatePriorChance of positive signal
Good0.3100%
Bad0.740.00%
Positive-signal probability
0.580
Posterior good given positive
0.517
Overall investment probability
0.580

Pooling some bad states can raise investment from 0.3 under full revelation to 0.6 at the boundary. More pooling then destroys credibility. The receiver knows the policy and updates by Bayes; this is not advice to deceive a real audience.

Binary states, fixed payoffs, credible commitment and a declared tie rule are essential. This is an information-design teaching model, not advice to mislead real people.

THE SHORT VERSION

Bayesian Persuasion, explained.

Bayesian persuasion studies how a sender’s commitment to an information structure changes a receiver’s posterior beliefs and actions.

01 / THE MECHANISM

Why it happens

The project’s good-state prior is 0.3. Every good state gets a positive signal; a chosen fraction of bad states also do. A receiver invests at posterior at least 0.5, including ties; the boundary fraction 3/7 produces investment probability 0.6.

Bayesian persuasion studies how a sender’s commitment to an information structure changes a receiver’s posterior beliefs and actions.

Read the result

The positive message’s posterior falls as more bad states enter it. A more frequent message can become unpersuasive once it crosses the receiver’s decision threshold.

02 / FOLLOW IT THROUGH

A worked example

Pool states up to a credible boundary

  1. Start with every good state labelled positive and forty percent of bad states labelled positive.

  2. Set the exact bad-state boundary three-sevenths to obtain posterior one-half and total investment probability 0.6.

  3. Increase pooling beyond that boundary and inspect the receiver’s refusal under the declared threshold and tie rule.

OPTIONAL DEEPER DETAILGo deeper: inside the model

Inside this model

The project’s good-state prior is 0.3. Every good state gets a positive signal; a chosen fraction of bad states also do. A receiver invests at posterior at least 0.5, including ties; the boundary fraction 3/7 produces investment probability 0.6.

03 / BEYOND THE EXPERIMENT

Where this idea is useful

A practical use

Inspect a signal’s selection policy before treating its content as an unfiltered observation.

CHECK YOUR INTUITION

A common misconception

THE TEMPTING CONCLUSION

“Adding more positive messages always increases persuasion.”

THE MORE USEFUL DISTINCTION

A receiver who knows the selection policy updates on how the message was produced. Excess pooling can destroy the message’s decision relevance.

What this explanation leaves out

  • Binary states, fixed payoffs, credible commitment and a declared tie rule are essential. This is an information-design teaching model, not advice to mislead real people.
ONE MORE QUESTION

Why does the exact boundary use investment at equality?

The model explicitly resolves posterior one-half in favour of investment. A different tie rule changes the boundary outcome.

TAKE THE IDEA WITH YOU

Which commitment and selection policy makes the message credible to its receiver?

Associated thinkers

Associated withEmir Kamenica ↗
Associated withMatthew Gentzkow ↗

Associations marked provisional are awaiting source review.

Further reading

Explore the original research or the teaching reference behind this experiment.