Muddled Information

Frankel, Alex; Kartik, Navin

doi:10.1086/701604

Cited by 86 publications

(49 citation statements)

References 32 publications

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“…The …rst term corresponds to his intrinsic motivation, which includes both an idiosyncratic 1 3 Bénabou and Tirole (2006) study signaling agents with heterogenous (privately known) image-concerns, and Fischer and Verrecchia (2000) and Frankel and Kartik (2014) agents with heterogenous payo¤s to misrepresenting their actions. In such settings, greater visibilty makes each individual's observed behavior less informative about his true motivations.…”

Section: Modelmentioning

confidence: 99%

Image versus Information: Changing Societal Norms and Optimal Privacy

Ali

Bénabou

2020

American Economic Journal: Microeconomics

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We analyze the costs and benefits of using social image to foster desirable behaviors. Each agent acts based on his intrinsic motivation, private assessment of the public good, and reputational concern for appearing prosocial. A Principal sets the general degree of privacy, observes the social outcome, and implements a policy: investment, subsidy, law, etc. Individual visibility reduces free riding but makes aggregate behavior (“descriptive norm”) less informative about societal preferences (“prescriptive norm”). We derive the level of privacy (and material incentives) that optimally trades off social enforcement and learning, and we characterize its variations with the economy’s stochastic and informational structure. (JEL D82, D83, D91, Z13)

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Section: Modelmentioning

confidence: 99%

Image versus Information: Changing Societal Norms and Optimal Privacy

Ali

Bénabou

2020

American Economic Journal: Microeconomics

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“…The price decline draws in a much more price-sensitive consumer to buy a ticket, which dampens the overall self-signal. Analogous forms of muddled information have been studied in the recent theoretical literature on multidimensional screening (e.g., Tirole 2006, Frankel andKartik 2014).…”

Section: Crowding Out and Multiplicitymentioning

confidence: 99%

Self-Signaling and Prosocial Behavior: A Cause Marketing Experiment

2017

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We test an information theory of prosocial behavior whereby ego utility and self-signaling crowd out the effect of consumption utility on choice. The data come from two field experiments involving purchases of a consumer good bundled with a charitable donation. Across experimental cells, we randomize the price level and the donation level. A model-free analysis of the data reveals nonmonotonic regions of demand when the good is bundled with relatively large charitable donations. Subjects also self-report lower ratings of "feeling good about themselves" when offered bundles with large donations and price discounts. The evidence suggests that price discounts crowd out consumer self-inference of altruism. Alternative motivation-crowding theories are rejected due to their inability to explain the nonmonotonic data moments. The standard use of interaction effects and other falsification checks to explore the underlying choice mechanism in an experimental setting is complicated in our self-signaling context. Instead, a novel feature of our analysis consists of using the experimental data to estimate the structural form of a model of consumer demand with self-signaling. We specify a model in which consumers obtain both consumption and ego utility from their choices. Ego utility derives from a consumer's posterior self-beliefs after making her choice. An estimator is proposed that handles the potential multiplicity of equilibria that can arise in the self-signaling model. The model estimates allow us to quantify the economic role of ego utility and to explore the underlying signaling mechanism. Nested tests reject the hypothesis of no self-signaling. Alternative model specifications that potentially allow for nonmontonic demand without the self-signaling structure exhibit an inferior fit to the data. The model estimates imply that consumer response to the donations are mainly driven by ego utility and not by consumption utility (i.e., not by altruistic motives). The findings from the combination of a field experiment and a structural model contribute to a growing literature on self-signaling and consumer behavior by quantifying the magnitude of self-signaling on preferences and choices. The results also have implications for the design of a cause marketing campaign and the potential negative synergies between price and nonprice promotions. History: Avi Goldfarb served as the senior editor and Duncan Simester served as associate editor for this article. Funding: Z. Fang acknowledges research support from the National Natural Science Foundation of China [Grants 71522010, 71472130, and 71202138], the Changjiang (Yangtze River) Scholar Award of the Ministry of Education of China, the Youth Foundation for Humanities and Social Sciences of the Ministry of Education of China [Grants 14YJC630166, 14YJA630024, and 12YJC630045], and Sichuan University [Grants skqy201502 and skqy201423].

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“…The possibility that the single-crossing property may fail to hold in some environments has been acknowledged in the literature, and there are sporadic and independent attempts to look into this situation in the analysis of signaling (Feltovich et al, 2002;Araujo et al, 2007;Daley and Green, 2014;Bobtcheff and Levy, 2017;Chen et al, 2020;Frankel and Kartik, 2019). 1 Much of this literature considers either a small number of discrete types or some specific payoff functions (or both).…”

Section: Introductionmentioning

confidence: 99%

Signaling under Double-Crossing Preferences

2020

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This paper provides a general analysis of signaling under doublecrossing preferences with a continuum of types. There are natural economic environments where indifference curves of two types cross twice, so that the celebrated single-crossing property fails to hold. Equilibrium exhibits a particular form of pooling: there is a threshold type below which types choose actions that are fully revealing and above which they choose actions that are clustered in possibly non-monotonic ways, with a gap separating these two sets of types. We also provide an algorithm to establish equilibrium existence by construction under mild conditions.

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Muddled Information

Cited by 86 publications

References 32 publications

Image versus Information: Changing Societal Norms and Optimal Privacy

Image versus Information: Changing Societal Norms and Optimal Privacy

Self-Signaling and Prosocial Behavior: A Cause Marketing Experiment

Signaling under Double-Crossing Preferences

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