Published September 6, 2022 | Version v1
Journal article Open

Optimal disclosure of information to privately informed agents

  • 1. University of Chicago
  • 2. Yale University

Description

We study information design with multiple privately informed agents who interact in a game. Each agent's utility is linear in a real-valued state. We show that there always exists an optimal mechanism which is laminar partitional and bound its ``complexity''. For each type profile, such a mechanism partitions the state space and recommends the same action profile within a partition element. Furthermore, the convex hulls of any two partition elements are such that either one contains the other or they have an empty intersection. We highlight the value of screening: the ratio of the optimal and the best payoff without screening can be equal to the number of types. Along the way, we shed light on the solutions to optimization problems over distributions subject to a mean-preserving contraction constraint and additional side constraints, which might be of independent interest.

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Additional details

Identifiers

DOI
10.3982/TE5173
Other
oai:uchicago.tind.io:9250

Funding

University of Chicago
Booth School of Business
Sloan Foundation

UChicago Information

Division(s)
Booth School of Business
Department(s)
Operations Management