How to Make an Action Attractive

Abstract

A policymaker often wants to steer a decision-maker toward one of two actions, but lacks reliable knowledge of how the decision-maker perceives uncertainty or evaluates risk. We formalize a notion of robust paternalism: a modification a' of a desired action a is robustly more attractive than a relative to b if, for every belief over states and every increasing concave utility function, whenever the decision-maker prefers a to b, she also prefers a' to b. We characterize all such modifications directly in terms of state-dependent payoffs and discuss applications to political competition, bilateral trade, insurance, and information acquisition.