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Information Design (ECO-AD-MCHDSGN)

ECO-AD-MCHDSGN


Department ECO
Course category ECO Advanced courses
Course type Course
Academic year 2024-2025
Term BLOCK 3
Credits 1 (EUI Economics Department)
Professors
Contact Simonsen, Sarah
Sessions

12/02/2025 14:00-16:00 @ Seminar Room B, Villa la Fonte

14/02/2025 14:00-16:00 @ Seminar Room B, Villa la Fonte

19/02/2025 14:00-16:00 @ Seminar Room B, Villa la Fonte

21/02/2025 14:00-16:00 @ Seminar Room B, Villa la Fonte

26/02/2025 14:00-16:00 @ Seminar Room B, Villa la Fonte

28/02/2025 14:00-16:00 @ Seminar Room B, Villa la Fonte

05/03/2025 14:00-16:00 @ Seminar Room B, Villa la Fonte

07/03/2025 14:00-16:00 @ Seminar Room B, Villa la Fonte

12/03/2025 14:00-16:00 @ Seminar Room B, Villa la Fonte

14/03/2025 14:00-16:00 @ Seminar Room B, Villa la Fonte

Enrollment info Contact [email protected] for enrolment details.

Description

Course Description
Economic decision-making is fundamentally driven by incentives, which can be influenced through transfers (rewards and punishments) or strategic information transmission. This course focuses on the latter, studying how communication and persuasion shape beliefs, decisions, and outcomes in economic environments.
The course is divided into two parts. The first focuses on static models of communication and persuasion, beginning with foundational concepts such as knowledge,
beliefs, and states and then moving to key models of persuasion and information design.
The second part covers dynamic models of communication and persuasion, including dynamic cheap talk, dynamic Bayesian persuasion, and information design, where the timing and structure of information influence strategies and payoffs over time. We will also examine various applications, such as college education and the provision of grades, political economy, pricing and market mechanisms, online platforms and recommender systems, and personnel economics. This is an advanced course intended for students interested in economic theory and information economics and provides a rigorous foundation for analyzing and conducting
research on the strategic role of information in economic decision-making.

Assesment
The course has two parts. Each part has a take-home exam (30%+30%) at the end of the term in addition to a referee report (40 %) from the list of papers that will be provided.

Course outline
Here is an outline of the material that we will cover.
Chapter 1 - Perlims.
Foundations of Incomplete Information (5h - 2/5 classes)
1 Common Knowledge and Rationality
1.1 What is Knowledge?
1.1.1 Common Knowledge and Agree to Disagree
Aumann (1976)
1.1.2 Email Game
Rubinstein (1989)
1.1.2 Common p-Belief
Kajii and Morris (1997a) and Kajii and Morris (1997b)
1.2 Beliefs, States, Robustness
Dekel and Gul (1997)
1.2.1 Infinite Hierarchies of Beliefs
1.2.2 Universal Type Space
1.2.3 Bay’s Plausibility
1.2.4 Applications: Career concern, Coordination games, Data sharing
Liang (2023)
Chapter 2 - Information in a Static Environment.
Static Communication & Information Design
(6h - 3 classes)
1 Communication games and cheap talk
Crawford and Sobel (1982)
2 Byesian Persuasion and Concavification
2.1 Bayesian Persuasion
Kamenica and Gentzkow (2011), Lipnowski and Mathevet (2018) and Aumann
and Maschler (1995)
2.2 Comparison to Cheap Talk
Lipnowski and Ravid (2020).
3 Information Design
3.1 Foundations
3.1.1 Formulation and Bayes Correlated Equilibrium
Taneva (2019) and Bergemann and Morris (2016).
3.1.2 Posterior-Mean Approach
Kolotilin (2018) and Dworczak and Martini (2019)
3.2 Application
3.2.1 School competition
Boleslavsky and Cotton (2015)
3.2.2 Political Economy
Alonso and Cˆamara (2016) and Kolotilin, Mylovanov, and Zapechelnyuk
(2022)
3.2.3 Pricing, Competition and Market Mechanisms
Koessler and Skreta (2021),Bergemann et al. (2022) and Armstrong and
Zhou (2022)

Chapter 3 - Information in a Dynamic Environment .
Dynamic Communication and Information Design

1 Dynamic Cheap Talk (3h - 1/5 classes)
1.1 Formulation (Martingale and Diconvexification)
Aumann and Hart (2003) and Aumann and Maschler (1995)
2 Dynamic Information design (6h - 3 classes)
2.1 Threshold Approach—Benevolent Recommender
Kremer, Mansour, and Perry (2014).
2.2 Concavivication and Obfuscation Approach—-Profit Maximizing Recomender
Ely (2017).
2.3 Gradualism— Dynamic Testing
H¨orner and Skrzypacz (2016).

References
Alonso, Ricardo and Odilon Cˆamara. 2016. “Persuading Voters.” American Economic
Review 106 (11):3590–3605.
Armstrong, Mark and Jidong Zhou. 2022. “Consumer Information and the Limits to
Competition.” American Economic Review 112 (2):534–77.
Aumann, Robert J. 1976. “Agreeing to Disagree.” The Annals of Statistics 4 (6):1236–
1239.
Aumann, Robert J. and Sergiu Hart. 2003. “Long Cheap Talk.” Econometrica
71 (6):1619–1660.
Aumann, Robert J. and Michael B. Maschler. 1995. Repeated Games with Incomplete
Information. Cambridge: MA: MIT Press.
Bergemann, Dirk, Tibor Heumann, Stephen Morris, Constantine Sorokin, and Eyal
Winter. 2022. “Optimal Information Disclosure in Classic Auctions.” American
Economic Review: Insights 4 (3):371–88.
Bergemann, Dirk and Stephen Morris. 2016. “Bayes Correlated Equilibrium and the
Comparison of Information Structures in Games.” Theoretical Economics 11:487–
522.
Boleslavsky, Raphael and Christopher Cotton. 2015. “Grading Standards and Education
Quality.” American Economic Journal: Microeconomics 7 (2):248–279.
Crawford, Vincent P. and Joel Sobel. 1982. “Strategic Information Transmission.”
Econometrica 50 (6):1431–51.
Dekel, Eddie and Faruk Gul. 1997. Rationality and knowledge in game theory. Econometric
Society Monographs. Cambridge University Press, 87–172.
Dworczak, Piotr and Giorgio Martini. 2019. “The Simple Economics of Optimal Persuasion.”
Journal of Political Economy 127 (5):1993–2048.
Ely, Jeffrey C. 2017. “Beeps.” American Economic Review 107 (1):31–53.
H¨orner, Johannes and Andrzej Skrzypacz. 2016. “Selling Information.” Journal of
Political Economy 124 (6):1515–1562.
Kajii, Atsushi and Stephen Morris. 1997a. “Commonp-Belief: The General Case.”
Games and Economic Behavior 18 (1):73–82.
4
———. 1997b. “The Robustness of Equilibria to Incomplete Information.” Econometrica
65 (6):1283–1309.
Kamenica, Emir and Matthew Gentzkow. 2011. “Bayesian Persuasion.” American
Economic Review 101 (6):2590–2615.
Koessler, Fr´ed´eric and Vasiliki Skreta. 2021. “Information Design by an Informed
Designer.” Working Paper.
Kolotilin, Anton. 2018. “Optimal information disclosure: A linear programming approach.”
Theoretical Economics 13 (2):607–635.
Kolotilin, Anton, Timofiy Mylovanov, and Andriy Zapechelnyuk. 2022. “Censorship
as optimal persuasion.” Theoretical Economics 17 (2).
Kremer, Ilan, Yishay Mansour, and Motty Perry. 2014. “Implementing the “Wisdom
of the Crowd”.” Journal of Political Economy 122 (5):988–1012.
Liang, Annie. 2023. “Information and Learning in Economic Theory.” URL https:
//arxiv.org/abs/2212.07521.
Lipnowski, Elliot and Laurent Mathevet. 2018. “Disclosure to a Psychological audience.”
AEJ: Microeconomics .
Lipnowski, Elliot and Doron Ravid. 2020. “Cheap Talk With Transparent Motives.”
Econometrica 88 (4):1631–1660.
Rubinstein, Ariel. 1989. “The Electronic Mail Game: Strategic Behavior under “Almost
Common Knowledge”.” American Economic Review 79 (3):385–91.
Taneva, Ina. 2019. “Information Design.” American Econoic Journal: Microeconomics
11 (4):151–85.
 

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Page last updated on 05 September 2023

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