Seminar by Srijita Ghosh (Ashoka University)

In this paper, we consider a market where information is readily available but often cognitively costly and sellers can directly affect the learning,i.e., obfuscate information for the buyer in a myriad of ways. Using the framework of a one-shot strategic communication game, we model the equilibrium obfuscation behavior of the seller. In our model, the buyer pays a cognitive cost of learning and the seller can garble the posterior belief distribution of the buyer directly.  We find that in equilibrium, if the buyer’s belief is favorable to the seller it is optimal to obfuscate fully, however, in case of unfavorable belief an intermediate (or zero) level of obfuscation becomes optimal. Our framework is agnostic about the form of obfuscation. Furthermore, we use two examples, namely, hiding information and providing misleading information to demonstrate how our model can be used to make testable predictions across different obfuscation practices.