Persuasion and Norm Persistence

Abstract

I study a dynamic information design problem à la Albano and Lizzeri (2001) in which a regulator can disclose unobserved quality information as the norms of a population evolve. Under moral hazard, the regulator sets a pass/fail standard ex-ante. A monopolist chooses a price to sell an asset to a population of consumers. Over time, consumers’ purchase decision depends on the signal, others’ buying behaviour, and norm evolution. In this paper, I use evolutionary game theory to describe the tension between quality certification and norm persistence.