Theoretical Foundations and Design of Persuasion Mechanisms

Lead Research Organisation: University of St Andrews
Department Name: Economics and Finance

Abstract

The proposed research studies the problem of persuasion. In this problem, a persuader has a substantial degree of control over information to be acquired and selectively disclosed, which can be used to manipulate a listener's beliefs and actions.

There are two broad questions to be addressed. One is the question of optimal persuasion design, a selective disclosure of information that maximizes the chance to persuade the listener. For example, suppose that a government would like to persuade the public to reduce the amount of public smoking by commissioning an educational campaign about the health risks of cigarettes. What is the optimal way to conduct the educational campaign? Should the government target different consumer groups by providing them with different information or is it efficient to provide the same information to everyone? When should the government withhold information from the public? How should the distribution of tastes among the consumers affect the optimal amount of information released by the government?

The second question is about protection of individuals from detrimental manipulation by a persuader. What are the factors that affect a listener's vulnerability to being persuaded and manipulated, and what can be done to reduce this vulnerability? What are the roles of individual privacy, diversity of individual tastes and opinions, and information transparency in organisations?

There is vast scope for potential impact of the proposed research project. Areas of impact include (but not limited to) optimal certification policies of financial and consumer products; public education campaigns; media censorship regulations; commercial advertising regulations (e.g., in pharmaceutical industry); privacy protection in social networks and internet trading portals; informational lobbying (e.g., a lobbying group commissions a study with the goal of influencing a politician's decision about adoption of a policy); persuasion issues in the design of experiments in social sciences.

The economics of persuasion, dwelling upon microeconomics and information theory, was pioneered by Rayo and Segal (Journal of Political Economy, 2010) and Kamenica and Gentzkow (American Economic Review, 2011). Despite the apparent power and generality of this theoretical framework, concrete insights into real-world persuasion mechanisms have so far been lacking (DellaVigna and Gentzkow (Annual Review of Economics, 2010) report evidence on systematic departures from existing theoretical models). One key roadblock is that existing theoretical methods are relatively intractable, and thus can only be usefully applied in very limited and specific settings. In particular, three important classes of economic settings that the current approaches can't handle:
- persuasion of an audience of diverse listeners with privately known preferences or interests;
- imperfect knowledge or (partial) misunderstanding of a persuasion mechanism by listeners;
- a prior informational advantage of a persuader (before a persuasion mechanism is chosen), so called "informed principal" problem in the persuasion context.

The proposed research project will apply the tools from mechanism design in novel ways to the persuasion problem. These tools will enable tractable analysis of the persuasion problem in each of the three settings described above. The proposed research project will build a comprehensive theoretical framework that incorporates the above scenarios and, hence, will be able to provide practically relevant guidance to policy makers, legislators, and human rights and consumer protection organizations.

Planned Impact

Non-academic beneficiaries from the proposed research are divided into two groups.

The first group of users will benefit from our recommendations and guidelines for the efficient design of persuasion mechanisms. Practically the recommendations will come in the form of advice regarding laws and regulations on information disclosure that facilitate desirable actions of a target audience. Campaign Resource Centre (the UK Department of Health) will be interested in recommendations about educational campaigns of vaccination, smoking, obesity, exercise, etc. VoxUkraine, an influential non-government organisation that conducts independent research-based policy analysis by leading scholars, policymakers and businessmen in Ukraine, has agreed to contribute to this research project by providing feedback and participating in steering group meetings. Particular issues that we can help to address are:
- How should public educational campaigns be designed to encourage people to make informed health decisions about vaccination, diet, exercise, etc?
- How should the government motivate people to acquire information about political issues and candidates, and thus produce informed voting outcomes?
- How should laws be designed to prevent rogue administrations from abusing their control of the media?
- How should financial regulations be designed to encourage accounting firms and financial institutions to disclose relevant financial information to the public?

The second group of beneficiaries includes consumer protection organisations, such as Citizens Advice, Citizens Advice Scotland and the Consumer Council for Northern Ireland, as well as organisations acting in the public interest that tackle the problems of transparency of authorities and protection of individual privacy, such as the Information Commissioner's Office in the UK, Privacy International, Human Rights Watch, Amnesty International, etc. Particular issues that we can help to address are:
- What are the reasons that cause an individual to be vulnerable to persuasion and manipulation?
- What are efficient methods to address this problem? What are the points of impact in the legislature that have to be altered? What public institutions should be created or improved?

This project will produce theoretical insights and practical prescriptions for these and related questions, which have can have social, political and economic implications at home and abroad. This can be of particular importance for developing countries, where the PI (Andriy Zapechelnyuk) and his academic collaborator, Tymofiy Mylovanov, have a record of contribution beyond the academic sphere. The PI have completed the grant project on modelling of the electricity market in Ukraine (IDRC grant, CRED project no. 104241); Tymofiy Mylovanov is an editor of VoxUkraine, and (together with Roger Myerson, who won the Nobel prize for his contributions to mechanism design) he has been leading an initiative to reform the Ukrainian constitution, with the goal of decentralizing the distribution of political power in Ukraine (see, for e

Publications

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Kolotilin A (2017) Persuasion of a Privately Informed Receiver in Econometrica

 
Description The published paper titled "Persuasion of a privately informed receiver" establishes equivalence between public and personalised persuasion. In summary, in a broad class of environments, there is no advantage of personalised persuasion based on self reported information (e.g., a patient fills the web form of medical history and receives a recommendation whether a particular drug is suitable in his/her case) over persuasion by public information (e.g., a patient reads a drug instruction leaflet to decide whether that drug is suitable in his/her case). Thus, an efficient persuasion campaign (e.g., convincing people to get vaccinated or to drink less) does not have to rely on individuals' private information.
Exploitation Route The finding provide insights in designing persuasion efficient persuasion campaigns (e.g., convincing people to get vaccinated or to drink less) or rating/certification of cervices (e.g., financial rating of banks and other financial institutions, or hygiene certification of restaurants).
Sectors Agriculture, Food and Drink,Financial Services, and Management Consultancy,Healthcare

 
Description Invited talk: Roy-Adres Seminar 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Andy Zapechelnyuk gave a talk on "Delegation Approach to Persuasion" at the Roy-Adres Seminar co-organised by Paris School of Economics, Université Paris-Dauphine, and Université Paris 1.
Year(s) Of Engagement Activity 2017
 
Description Invited talk: University of Chicago 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Anton Kolotilin gave a talk on "Delegation Approach to Persuasion" at the University of Chicago
Year(s) Of Engagement Activity 2017
 
Description Invited talk: university of Mannheim 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Andy Zapechelnyuk gave a talk on "Delegation Approach to Persuasion" at the University of Mannheim
Year(s) Of Engagement Activity 2017
 
Description Meeting with Mr Geoff Ogle, CEO of Food Standards Scotland 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact A meeting with Mr Geoff Ogle, CEO of Food Standards Scotland, on Friday 16th February. Food Standards Scotland is a stakeholder organization in the current project that we target to make impact through. On Friday 16th Feb, there was an initial discussion with the CEO where we outlined the directions and priorities of the research, and identified key people within Food Standards Scotland that we need to work with in future. In addition, Mr Geoff Ogle gave a practitioner seminar aimed at post and undergraduate students.
Year(s) Of Engagement Activity 2018
 
Description Project website 
Form Of Engagement Activity Engagement focused website, blog or social media channel
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact A website and blog that reports progress and activities of the research project and allows for comments and discussions
Year(s) Of Engagement Activity 2018
URL https://persuasion.wp.st-andrews.ac.uk
 
Description Special session within the 2017 SAET Conference 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact A session on the frontiers of information design, persuasion and communication, organised within the 2017 SAET Conference (Society for the Advancement of Economic Theory), Faro, Portugal, June 25-30, 2017.

The session featured the talks from leading specialists in the field:

"On the value of persuasion by experts" by Ricardo Alonso (London School of Economics), joint with Odilon Camara (University of Southern California)
"Relational Communication" by Anton Kolotilin (University of New South Wales), joint with Hongyi Li (University of New South Wales)
"Disclosure and Pricing of Attributes" by Alex Smolin (University of Bonn)
"Disclosure and Rollover Risk" by Jack Stecher (Carnegie Mellon University), joint with Michael Ebert (University of Paderborn), Joseph B. Kadane (Carnegie Mellon University), and Dirk Simons (University of Mannheim)
Year(s) Of Engagement Activity 2017