Estrada Rodriguez, Arturo; Ibrahim, Rouba; Kremer, Mirko; (2023) Persuasive Communication in Social Service Operations. SSRN

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Abstract

We study the effectiveness of information design as a managerial lever to mitigate the overuse of critical resources in congestion-prone social service systems. Leveraging the service provider’s informational advantage about relevant aspects of the system, effective communication requires the sharing of carefully curated information to persuade low-need customers to forego service for the benefit of customers with higher service needs. To study whether effective communication can arise in equilibrium, we design controlled laboratory experiments to test the predictions of a queueing-game theoretic model that endogenizes the implementation of information-sharing policies. Our main result is that communication increases social welfare even when the service provider lacks the ability to formally commit to their information policy (as usually is the case in practical settings), i.e., under conditions where standard theory predicts that communication fails because it lacks credibility and thus fails to affect customer behaviour.

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