Talk (Work in Progress): Todd Stambaugh (MCMP)
Lying and Lie-Detection in Bayesian Persuasion Games with Costs and Punishments (joint work with Mantas Radzvilas)
If the aim of pharmaceutical regulators is to prevent dangerous and ineffective drugs from entering the market, the procedures they implement for approval of drugs ought to incentivize the acquisition and accurate reporting of research on the questions of safety and effectiveness. These interactions take the form of Sender-Receiver games, in which Pharmaceutical companies seeking approval of a drug conduct research themselves and report the results to the regulators. Of course, the companies may be inclined to falsify these reports, even in light of the costs and possible penalties for doing so. The main aim of this work is to give a formal model for this kind of interaction and to identify the mechanism that is optimal for the regulatory body, and by proxy, the public, when the costs of information, lying, and the detection of lies are nontrivial.
In this model, the Sender incurs costs via noisy acquisition of information by sequential testing, falsification of reports of individual tests, and punitive measures upon detection by the Receiver of falsified reports. Further, the model has an epistemic dimension, in which the Sender believes that the likelihood of being caught lying is increasing in the number of falsified reports. The Receiver is cautious in the sense that she doesn’t rule out the possibility that falsification is a viable strategy for the Sender’s type, and she makes probabilistic inferences about the Sender’s type and strategy from the messages she receives. The ability of the Receiver to detect lies is limited by the costs of her verification procedure.
The aim of our examination of this model is to identify sequential equilibria of the game under multiple constraints on the payoffs, costs, and type structures of the players. Additionally, we seek to identify the report verification strategy that is optimal, i.e. if known to the Sender, the strategy that minimizes the incentives to falsify reports. This has the potential to enable regulators to optimize existing efforts to curb misinformation within existing frameworks.