In mediated communication with transparent sender motives, allowing the sender to burn money strictly raises his equilibrium payoff for almost all priors where commitment has value, and the optimal value equals the worst-case Bayesian persuasion payoff.
Contracting with imperfect commitment and the revelation principle: the single agent case
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Money Burning Improves Mediated Communication
In mediated communication with transparent sender motives, allowing the sender to burn money strictly raises his equilibrium payoff for almost all priors where commitment has value, and the optimal value equals the worst-case Bayesian persuasion payoff.