Research Papers

Persuasion for the Long-Run |  with James Best
Revise & Resubmit, Journal of Political Economy
New Version (July 2022)
We examine persuasion when the sole source of credibility today is a desire to maintain a public record for accuracy. A long-run sender plays a cheap talk game with a sequence of short-run receivers, who observe some record of feedback about past accuracy. A geometric approach shows that when all feedback is public (as standard in repeated games), persuasion frequently requires inefficient on-path punishment---even if accuracy is monitored perfectly. If instead the record publishes coarse summary statistics (as is common online), any communication equilibrium the sender prefers to one-shot cheap talk---including Bayesian persuasion---can be supported without cost.

Inside and Outside Information |  with Ansgar Walther 
Revise & Resubmit, Journal of Finance
2016 Econometric Society European Meeting Award
New Version (July 2022)
We study an economy with financial frictions in which a regulator designs a test that reveals outside information about a firm’s quality to investors. The firm can also disclose verifiable inside information about its quality. We show that the regulator optimally aims for “public speech and private silence”, which is achieved with tests that give insiders an incentive to stay quiet. We fully characterize optimal tests by developing tools for Bayesian persuasion with incentive constraints, and use these results to derive novel guidance for the design of bank stress tests, as well as socially optimal corporate credit ratings.

Contradiction-Proof Information Design |  with Ansgar Walther
We study the role of information design in settings where privately informed parties can additionally make strategic disclosures. A committed persuader and an uncommitted, privately informed sender can disclose hard evidence to a decision-maker. Treating the problem as one of design, we fully characterize the range of informational outcomes that can be obtained in equilibrium by means of a general opacity principle. Using the opacity principle, we establish a solution method for a class of optimal design problems with endogenous disclosures, and compare our solutions to the Bayesian Persuasion benchmark without disclosures. For a range of disclosure costs, the presence of voluntary disclosures forces the persuader to provide no less information than the benchmark if the benchmark setting gives high types the greatest incentive to disclose. When intermediate types most want to disclose, optimal persuasion can become less informative than the commitment benchmark. Finally, we apply our results to study optimal financial stress tests, performance reviews and investment advice.

​The roles of transparency in regime change  |  with Frederik Toscani
How does freedom of information about an institution's resilience affect its stability? We study the ex ante impact of public information on regime change in a global game, accounting for uncertainty over what will be communicated. A fundamental tension exists in the ways public information impacts coordination. When the probability of regime change is already high, public information persuades agents into larger attacks. But under these conditions information targets attacks wastefully. For `small' releases of public information, we characterize the overall implications of this trade-off for regime change. When the incumbent is ex ante weak, public information persuades agents to attack while simultaneously reducing their chances of success. By contrast, lower costs imply transparency negatively affects regime change only if the marginal productivity of attacks is sufficiently high.

Using Rivals' Bids to Learn: A Role for Openness in Auction Design  | 
I study the role of bid disclosures in an auction design environment with private values. Bidders each receive a noisy signal of their own valuations and can acquire more information at a cost. The seller can design the auction format and the extent of disclosure across rounds under commitment. In a two-bidder environment, it is revenue maximising for the seller to commit to a transparent two-stage auction which I call the Information-Optimal Handicap Auction (IOHA). In the first stage of IOHA, bidders can purchase handicaps from the seller. These bids are then publicly revealed to bidders, without charge. However, bidders are charged if their own first-round bids dissuade their rivals from acquiring more information. The second stage takes a second-price form with the handicaps applied to bids. When values are exponentially distributed, the optimal auction is simply a dynamic second price auction, with additional charges imposed if a bidder wins the object by `sniping'. While the seller and bidder agree about his optimal information acquisition in the auction, surprisingly IOHA does not generate efficient learning. Finally, I provide sufficient conditions under which the results generalise.

Projects in Progress

History Design  |  with James Best

Community Rating and Monopoly Screening  |  with Andre Veiga

Credibility and Persuasion in the Long Run  |  with James Best and Peiran Jiao

Transparency in Global Games of Regime Change  |  with Toni Ahnert, Christoph Bertsch and Frederik Toscani