Information Nudges and Self Control

Mariotti, Thomas, Schweizer, Nikolaus, Szech, Nora and von Wangenheim, Jonas (2018) Information Nudges and Self Control. IAST working paper, n. 18-84, Toulouse

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Official URL: http://iast.fr/pub/33041

Abstract

A present-biased consumer has to make sequential consumption decisions under no commitment. Consumption is enjoyable in the short term but potentially harmful in the long term. The likelihood of harmful future consequences hinges on the consumer's type. While the distribution of types is common knowledge, the consumer's individual type is initially unknown. We study information design in this setting, varying how much a consumer learns about his type via an information nudge. We first consider a mechanism designer who is benevolent in the sense that his interests are aligned with the consumer's. We find that there always exists an optimal incentive-compatible persuasion mechanism that is of cutoff type, either recommending consumption or abstinence, and we provide a full characterization of this information nudge for an arbitrary distribution of types. Under a stronger bias for the present, the target group of the nudge who receives a credible signal to abstain must be tightened. We compare this information nudge with the optimal information structure if expected consumption should be minimized, and if it should be maximized. The first may be the goal of a health authority, whereas the latter may be preferred by a lobbyist.

Item Type: Monograph (Working Paper)
Language: English
Date: April 2018
Place of Publication: Toulouse
Uncontrolled Keywords: Information Design, Information Nudge, Present-Biased Preferences, SelfControl
JEL codes: C73 - Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
D82 - Asymmetric and Private Information
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Toulouse Capitole University
Site: UT1
Date Deposited: 07 Nov 2018 09:16
Last Modified: 07 Nov 2018 09:16
OAI ID: oai:tse-fr.eu:33041
URI: http://publications.ut-capitole.fr/id/eprint/26378

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