Information manipulation and social coordination

Hosted by Begona Dominguez

This paper studies information manipulation in a sender/receiver game with many imperfectly coordinated receivers. An individual receiver wants both to align their choices with an imperfectly observed state and also to align their individual choices with the choices made by fellow receivers. The sender is informed about the state and seeks to prevent the receivers coordinating on it.

To prevent coordination, the sender takes a costly hidden action that affects the receivers' private information. In equilibrium, the sender is unable to introduce any bias into the receivers' information. But the manipulation is nonetheless always payoff-improving for the sender. This is because the manipulation decreases the precision of individual information, making it harder to coordinate.

The sender benefits most from manipulation when receivers are inclined to respond heavily to their private information, i.e., when the intrinsic precision of their private signals is high or when they have weak preferences for coordination.