Affiliation:
1. Faculty of Industrial Engineering and Management, Technion–Israel Institute of Technology
2. Toulouse School of Economics, University of Toulouse Capitole
Abstract
Mean‐preserving contractions are critical for studying Bayesian models of information design. We introduce the class of
bi‐pooling policies, and the class of
bi‐pooling distributions as their induced distributions over posteriors. We show that every extreme point in the set of all mean‐preserving contractions of any given prior over an interval takes the form of a bi‐pooling distribution. By implication, every Bayesian persuasion problem with an interval state space admits an optimal bi‐pooling distribution as a solution, and conversely, for every bi‐pooling distribution, there is a Bayesian persuasion problem for which that distribution is the
unique solution.
Funder
European Research Council
Agence Nationale de la Recherche
Israel Science Foundation
United States-Israel Binational Science Foundation
Ministry of Science and Technology, Israel
Technion-Israel Institute of Technology
Subject
General Economics, Econometrics and Finance
Reference21 articles.
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