Information Design with Equilibrium Selection

Abstract

This paper extends the solution concept in information design problems, in which a designer aims to implement a particular game outcome by controlling the structure of signals that the players receive. Specifically, we consider settings in which an equilibrium is implementable only if it satisfies an exogenous selection criterion. We focus on optimal information design in a common-interest two-player game with binary actions, requiring the selected equilibrium to satisfy risk dominance. We provide a method for the designer to maximize the probability of making the best equilibrium risk dominant, and show how to extend our approach to other settings.