Template-type: ReDIF-Paper 1.0

Author-Name: James Best
Author-Workplace-Name: Dept of Economics and Nuffield College, University of Oxford
Author-Email:james.best@economics.ox.ac.uk
Author-Name: Daniel Quigley
Author-Workplace-Name: Dept of Economics and Nuffield College, University of Oxford
Author-Email: daniel.quigley@economics.ox.ac.uk
Title: Persuasion for the Long-Run
Abstract: We examine the limits of persuasion when credibility today is sustained by the incentive
of future credibility. We model this as a long-run sender with private information
playing a cheap talk game against short-run receivers where there is a noisy signal at
the end of each period on the sender’s ex-ante private information. We compare our
model of long-run persuasion to the persuasion baseline of committed persuasion, where
the sender can commit to strategies at the stage game. Long-run persuasion can only
achieve the optimal committed persuasion payoffs if the optimal committed persuasion
strategy is “honest”. When the optimal committed strategy is not honest the use of
either a weak communication mechanism called a ‘Coin and Cup’ (CnC) or a standard
communication mechanism (a mediator) expands the Pareto frontier of the game. For
sufficiently patient senders, a CnC mechanism replicates committed persuasion payoffs
when the sender’s information is perfectly observed ex-post, whereas a mediator
can get arbitrarily close whenever systematic deviation from truth telling is asymptotically
identified. The advantage of the CnC over the mediator is that it is relatively
easy to manufacture and implement. Finally, we show how ‘emergent communication
mechanisms’ arise when there are many simultaneous receivers.

X-Classification-JEL:
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Length: 58 pages
Creation-Date: 2016-12-09
Number: 2016-W12
File-URL: https://www.nuffield.ox.ac.uk/economics/papers/2016/BestQuigley_persuasion_longrun_30_01_2017.pdf
File-Format: application/pdf
Handle: RePEc:nuf:econwp:1612