From Design to Disclosure: Equivalence of Information Design and Voluntary Disclosure in Sender-Receiver Games

Kernekoncepter

In strategic interactions where the sender doesn't benefit from full disclosure, voluntary disclosure can achieve virtually the same payoffs as information design, suggesting an equivalence between the two.

Resumé

Ali, S. N., Kleiner, A., & Zhang, K. (2024). From Design to Disclosure (No. 2411.03608). arXiv.

This paper investigates the range of equilibrium payoffs in games of voluntary disclosure, where a sender strategically reveals information to a receiver who then takes an action, and compares it to the payoffs achievable through information design.

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From Design to Disclosure

by S. Nageeb Al... kl. arxiv.org 11-07-2024

https://arxiv.org/pdf/2411.03608.pdf

Dybere Forespørgsler

How might the presence of multiple senders or receivers impact the equivalence between information design and voluntary disclosure?

Introducing multiple senders or receivers significantly complicates the strategic landscape of disclosure games, potentially disrupting the equivalence between information design and voluntary disclosure established in the paper. Here's why:
Multiple Senders:

Strategic Interactions: With multiple senders, their disclosure decisions become intertwined. Each sender must consider not only her own information and the receiver's response but also the potential disclosures of other senders. This introduces elements of competition or cooperation that are absent in a single-sender setting. For example, senders might engage in a "disclosure race" to portray themselves favorably compared to others, leading to more information revelation than in the single-sender case.
Correlated Information: If senders possess correlated information, their disclosures can become signals not only about their own types but also about the types of other senders. This signaling aspect can create incentives for strategic withholding or manipulation of information that wouldn't exist with independent types.
Equilibrium Multiplicity: The presence of multiple senders often leads to a wider range of possible equilibria, making it more challenging to pinpoint the outcomes achievable through voluntary disclosure.
Multiple Receivers:

Information Asymmetry Among Receivers: If receivers have different information about each other or about the senders, disclosure by one sender can trigger a cascade of strategic responses from both other senders and receivers. This can lead to outcomes unpredictable by analyzing individual receiver responses in isolation.
Competition Among Receivers: Multiple receivers might compete for the attention or business of the sender. This competition can incentivize receivers to interpret disclosures in ways that benefit them, potentially distorting the information transmission process.
Implications for Equivalence:
The complexities introduced by multiple senders or receivers suggest that the equivalence between information design and voluntary disclosure is less likely to hold. The sender's ability to achieve a particular pay-off through voluntary disclosure would depend heavily on the specific details of the game, such as the number of players, the correlation of information, and the competitive dynamics.
Further Research:
Exploring the implications of multiple senders or receivers in disclosure games is a fruitful avenue for future research. It would be interesting to identify specific conditions under which some degree of equivalence might still hold or to characterize the new set of achievable pay-offs in these more complex settings.

Could there be situations where the sender might strategically prefer voluntary disclosure over information design, even if both could achieve similar payoffs?

While Theorem 1 demonstrates the approximate equivalence of achievable payoffs between voluntary disclosure and information design under certain conditions, there are situations where the sender might strategically prefer voluntary disclosure, even if both mechanisms could yield similar payoffs. This preference can arise from the strategic dynamics inherent in voluntary disclosure that are absent in the commitment structure of information design.
Here are some scenarios where this preference might emerge:

Signaling Credibility: Voluntary disclosure can signal a sender's confidence in her information in a way that information design cannot. By choosing to disclose voluntarily, the sender effectively stakes her reputation on the information being perceived as favorable. This can be particularly relevant when the receiver has doubts about the sender's motives or the accuracy of the information.
Flexibility and Adaptation: Voluntary disclosure offers the sender real-time flexibility to adapt her disclosure strategy based on the receiver's reactions or evolving circumstances. In contrast, information design requires pre-commitment to a fixed information structure, which can be limiting in dynamic environments.
Lower Implementation Costs: Designing and implementing a formal information structure can involve costs, such as hiring auditors or setting up monitoring systems. Voluntary disclosure, being more informal and reliant on existing communication channels, can be less costly to implement.
Example:
Consider a startup seeking funding from an investor. The startup possesses private information about its technology's potential. While the startup could design a formal information disclosure process involving audits and expert valuations, it might prefer to engage in voluntary disclosure by selectively sharing promising early results or customer testimonials. This approach signals the startup's belief in its technology and allows for flexible adaptation of the disclosure strategy based on the investor's feedback.
Caveat:
It's important to note that these advantages of voluntary disclosure are context-dependent and might not always outweigh the benefits of commitment offered by information design. The sender's preference would depend on factors like the importance of signaling credibility, the degree of environmental uncertainty, and the costs associated with each mechanism.

If we view the choice of evidence structure as a form of "language," what insights from linguistics or communication theory could shed light on strategic disclosure?

Viewing the choice of evidence structure as a form of "language" opens up intriguing avenues for applying insights from linguistics and communication theory to understand strategic disclosure. Here are some potential connections:

Pragmatics and Implicature: Pragmatics, the study of how context contributes to meaning, can shed light on how receivers interpret disclosures beyond their literal content. Just as a speaker's utterance can convey implied meanings (implicatures), a sender's choice of what evidence to disclose and how to frame it can carry implicit messages about the undisclosed information. Receivers, aware of the sender's strategic incentives, would naturally draw inferences based on these implicit cues.
Signaling Games and Costly Signaling: The concept of costly signaling in communication theory aligns well with strategic disclosure. Senders might choose to disclose certain types of evidence, even if not directly beneficial, to signal their credibility or commitment. The costlier the signal (e.g., disclosing proprietary information), the more credible the signal becomes, as only senders with favorable information would be willing to incur the cost.
Language Evolution and Information Transmission: Theories of language evolution, which explore how languages adapt to facilitate efficient information transfer, can offer insights into the dynamics of evidence structures. Just as languages evolve to convey relevant information within a community, evidence structures within a market or organization might evolve over time to facilitate credible signaling and efficient information exchange.
Framing and Persuasion: Research on framing effects highlights how the way information is presented can influence receivers' judgments and decisions. Senders, aware of these effects, might strategically frame their disclosures to nudge receivers towards their desired actions. Understanding these framing techniques can help receivers discern the sender's strategic intent and make more informed decisions.
Example:
Consider a pharmaceutical company disclosing clinical trial results for a new drug. The company might choose to emphasize positive findings while downplaying or omitting less favorable data points. This framing, akin to strategic language use, aims to persuade regulators and physicians about the drug's efficacy and safety.
Further Exploration:
Integrating concepts from linguistics and communication theory into the study of strategic disclosure can enrich our understanding of how information is strategically conveyed and interpreted in various settings. This interdisciplinary approach can lead to more nuanced models of disclosure games and provide practical guidance for both senders and receivers on how to navigate these complex communication scenarios.