Corpus ID: 199064667

Dynamic Information Design with Diminishing Sensitivity Over News

@article{Duraj2019DynamicID,
  title={Dynamic Information Design with Diminishing Sensitivity Over News},
  author={Jetlir Duraj and Kevin He},
  journal={arXiv: Theoretical Economics},
  year={2019}
}
  • Jetlir Duraj, Kevin He
  • Published 2019
  • Computer Science, Economics
  • arXiv: Theoretical Economics
  • A benevolent sender communicates non-instrumental information over time to a Bayesian receiver who experiences gain-loss utility over changes in beliefs ("news utility"). We show how to compute the optimal dynamic information structure for arbitrary news-utility functions. With diminishing sensitivity over the magnitude of news, one-shot resolution of uncertainty is strictly suboptimal under commonly used functional forms. Information structures that deliver bad news gradually are never optimal… CONTINUE READING