Persuading Risk-Conscious Agents: A Geometric Approach

Abstract

A Convex Programming Framework for Information Design Under Realistic Human Behavior Platform markets and services typically have additional relevant information in comparison with their users. Information design studies how the sharing of this information can be leveraged by the platform to influence user behavior and obtain desirable outcomes. Previous research has studied information design assuming that the users act to maximize their expected utility, but this assumption does not always hold in reality. Instead, people often exhibit biases and deviations from expected utility maximization. In “Persuading Risk-Conscious Agents: A Geometric Approach,” Anunrojwong, Iyer, and Lingenbrink study information design with “risk-conscious” agents whose utility functions may depend nonlinearly on their beliefs. They provide a convex programming approach for solving for the optimal persuasion mechanism and establish their structural properties in different settings. They illustrate their approach in an application involving the sharing of waiting-time information in a queueing system. Overall, this work contributes to the study of information design under realistic models of human behavior.