MICRO/THEORY: Coarse Information Design; Professor Suen Wing Chuen (The University of Hong Kong (HKU))

Abstract

We study an information design problem with continuous state and discrete signal space. Under convex value functions, the optimal information structure is interval-partitional and exhibits a dual expectations property: each induced signal is the conditional mean (taken under the prior density) of each interval; each interval cutoff is the conditional mean (taken under the value function curvature) of the interval formed by neighboring signals. This property enables examination into which part of the state space is more finely partitioned and facilitates comparative statics analysis. The analysis can be extended to general value functions and adapted to study coarse mechanism design.

Click here to view paper.