Persuasive Exaggeration in Selling by an Expert
Prof. Jie ZHENG
Distinguished Professor,
Director for the Center for Research on Experimental and
Theoretical Economics (CREATE)
Shandong University
Date: 16 December 2024 (Monday)
Time: 15:00 – 16:00
Venue: E22-G015
Host: Prof. Degui LI, Distinguished Professor in Business Economics
Abstract
We consider the persuasive sales problem by a better-informed expert, such as a medical professional selling treatments to a patient. The patient needs to take at least a state-dependent level of treatment to recover, while being uninformed of the state. For different market price levels of treatment, we derive the medical professional’s optimal information disclosure policy regarding a patient’s condition. We further consider the scenario that the expert can engage in both persuasive selling via exaggeration of their private information, and setting the price of the product. We then consider the problem of a regulator implementing price controls under two objectives: aiming to have every patient in good health, and seeking to maximize the probability that each patient receives their appropriate treatment. Our study contributes to the credence goods literature by adopting the approach of information design rather than the framework of cheap talk. The patient’s threshold-type payoff structure considered in our work fits well to the real world, and is also new to the Bayesian persuasion literature.
Speaker
Jie Zheng is University Distinguished Professor at Shandong University, and he serves as the Director for the Center for Research on Experimental and Theoretical Economics (CREATE). Dr. Zheng received his B.A and M.A. in Economics from Tsinghua University, and Ph.D. in Economics from Washington University in St. Louis. He is the first Associate Editor from mainland China for the Journal of Economic Behavior and Organization and a co-director of China Behavioral and Experimental Economics Forum.
His main research fields are information economics and experimental economics. He has published over 50 research papers in journals including Nature Communications, American Economic Review (Papers and Proceedings), Games and Economic Behavior, Management Science, Journal of Industrial Economics, Journal of Mathematical Economics, Experimental Economics, and Journal of Economic Behavior and Organization.
All are welcome!
