Persuasion as Matching

Kolotilin, Anton; Corrao, Roberto; Wolitzky, Alexander

doi:10.2139/ssrn.4140246

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2024

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“…25 Garcia and Tsur (2021) also find negative assortative matching in a finite-types insurance setting. In a model with a continuous state and smooth payoffs, Kolotilin, Corrao, and Wolitzky (2023) find conditions for negative assortative matching to be optimal. Their setting involves no incentive constraints.…”

Section: G2 Ex Post Disclosuresmentioning

confidence: 99%

Inside and Outside Information

QUIGLEY,

WALTHER

2024

The Journal of Finance

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We study an economy with financial frictions in which a regulator designs a test that reveals outside information about a firm's quality to investors. The firm can also disclose verifiable inside information about its quality. We show that the regulator optimally aims for “public speech and private silence,” which is achieved with tests that give insiders an incentive to stay quiet. We fully characterize optimal tests by developing tools for Bayesian persuasion with incentive constraints, and use these results to derive novel guidance for the design of bank stress tests, as well as benchmarks for socially optimal corporate credit ratings.

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Section: G2 Ex Post Disclosuresmentioning

confidence: 99%