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Selective Disclosure in Overlapping Generations

Nemanja Antic, Harry Pei

TL;DR

This paper analyzes intergenerational information transmission in an overlapping-generations framework with verifiable disclosures and exogenous communication frictions. Agents disclose signals to maximize their successor's belief about a binary state, generating payoff externalities that drive selective disclosure as frictions vanish. The authors establish that near-full communication yields extreme selectivity, often revealing only the signal with the highest likelihood ratio, and provide a full characterization for constant-threshold equilibria, including how a planner might influence outcomes via the communication success rate $\delta$. The results contribute to understanding how demographic-era transmission conventions shape long-run beliefs and behavior, with applications to cultural beliefs such as the belief in a just world and the American Dream versus European narratives.

Abstract

We develop an overlapping generations model where each agent observes a verifiable private signal about the state and, with positive probability, also receives signals disclosed by his predecessor. The agent then takes an action and decides which signals to pass on. Each agent's action has a positive externality on his predecessor and his optimal action increases in his belief about the state. We show that as the communication friction vanishes, agents become increasingly selective in disclosing information. As the probability that messages reach the next generation approaches one, all signals except those with the highest likelihood ratio will be concealed in equilibrium.

Selective Disclosure in Overlapping Generations

TL;DR

This paper analyzes intergenerational information transmission in an overlapping-generations framework with verifiable disclosures and exogenous communication frictions. Agents disclose signals to maximize their successor's belief about a binary state, generating payoff externalities that drive selective disclosure as frictions vanish. The authors establish that near-full communication yields extreme selectivity, often revealing only the signal with the highest likelihood ratio, and provide a full characterization for constant-threshold equilibria, including how a planner might influence outcomes via the communication success rate . The results contribute to understanding how demographic-era transmission conventions shape long-run beliefs and behavior, with applications to cultural beliefs such as the belief in a just world and the American Dream versus European narratives.

Abstract

We develop an overlapping generations model where each agent observes a verifiable private signal about the state and, with positive probability, also receives signals disclosed by his predecessor. The agent then takes an action and decides which signals to pass on. Each agent's action has a positive externality on his predecessor and his optimal action increases in his belief about the state. We show that as the communication friction vanishes, agents become increasingly selective in disclosing information. As the probability that messages reach the next generation approaches one, all signals except those with the highest likelihood ratio will be concealed in equilibrium.
Paper Structure (12 sections, 34 equations, 1 figure)

This paper contains 12 sections, 34 equations, 1 figure.

Table of Contents

  1. Introduction
  2. Model
  3. Main Results
  4. Proof of Theorem 1
  5. Equilibria in Threshold Strategies:
  6. Equilibria with Monotone Belief Maps:
  7. Application: Beliefs in a Just World
  8. Comparative Statics on $\delta$:
  9. Concluding Remarks
  10. Proof of Proposition 1
  11. Proof of Lemma \ref{['L1']}
  12. Proof of Lemma \ref{['L2']}

Figures (1)

  • Figure 1: A sequence of realized private signals after the most recent communication failure, with red circles representing bad signals and green circles representing good signals. In this example, there are $4$ good signals and $5$ bad subsequences. The bad subsequence before good signal $1$ has length $3$, the bad sequence between good signals $1$ and $2$ has length $0$, the bad subsequence between good signals $2$ and $3$ has length $2$, the bad subsequence between good signals $3$ and $4$ has length $6$, and the bad subsequence after good signal $4$ has length $2$.

Theorems & Definitions (2)

  • proof : Proof of Theorem 2:
  • proof