In economics and game theory, Bayesian persuasion involves a situation where one participant (the sender) wants to persuade the other (the receiver) of a certain course of action.
Upon seeing said information, the receiver will revise their belief about the state of the world using Bayes' Rule and select an action.
Bayesian persuasion was introduced by Kamenica and Gentzkow,[1] though its origins can be traced back to Aumann and Maschler (1995).
The assumptions are: For example, suppose the prior probability that the medicine is good is 1/3 and that the company has a choice of three actions: In this case, the third policy is optimal for the sender since this has the highest expected utility of the available options.
The online case, where multiple signals are sent over time, can be solved efficiently as a regret minimization problem.