When competence hurts: revelation of complex information


When the information might be complex and the information processing capacity of economic agents is uncertain, noisy messages do not necessarily indicate bad news. I exploit this intuition to examine a simple sender-receiver persuasion game in which the precise communication of the state of the world depends not only on sender’s efforts but also on the state’s complexity and the receiver’s competence. In this environment the sender-optimal equilibria maximize the amount of noise. The receiver faces a competence curse – a smarter type might end up with less information and lower payoff than a receiver with a somewhat smaller competence.