Persuasion and Optimal Stopping
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Title: Persuasion and Optimal Stopping
(joint work with Sivakorn Sanguanmoo (MIT) and Weijie Zhong (Stanford GSB))
Abstract: We analyze the interplay between persuasion, timing, and commitment. A principal conducts a sequence of statistical experiments to persuade an agent to stop at the right time, in the right state, and choose the right action. We develop a revelation principle—which allows us to leverage a first-order approach to solve the principal’s problem under commitment—and an anti-revelation principle—which allows us to transform the solution to restore dynamic consistency. We further characterize how time and action preferences jointly shape optimal strategies featuring suspense-generation which optimally concentrates the agent’s stopping time, and action-targeting which maximally correlates/anticorrelates persuasion and delay.