A benevolent sender communicates non-instrumental information over time to a Bayesian receiver who experiences gain-loss utility over changes in beliefs ("news utility"). We show how to inductively compute the optimal dynamic information structure for arbitrary news-utility functions. With diminishing sensitivity over the magnitude of news, contrary to piecewise-linear news-utility models, one-shot resolution of uncertainty is strictly suboptimal under commonly used functional forms. We identify additional conditions that imply the sender optimally releases good news in small pieces but bad news in one clump. By contrast, information structures featuring the opposite skewness - i.e., delivering bad news gradually - are never optimal. A sender lacking commitment powercan only credibly convey partial good news when the receiveris sufficiently loss averse. With diminishing sensitivitybut no loss aversion, the babbling equilibrium is essentially unique. Contrary to the commitment case, a sender without commitment may generate higher equilibrium news-utility for receivers with higher loss aversion .
A benevolent sender communicates non-instrumental information over time to a Bayesian receiver who experiences gain-loss utility over changes in beliefs ("news utility"). We show how to inductively compute the optimal dynamic information structure for arbitrary news-utility functions. With diminishing sensitivity over the magnitude of news, unlike in piecewise-linear news-utility models, one-shot resolution of uncertainty is strictly suboptimal under commonly used functional forms. We identify additional conditions that imply the sender optimally releases good news in small pieces but bad news in one clump. By contrast, information structures that deliver bad news gradually are never optimal. When the sender lacks commitment power, good-news messages confront a credibility problem given the receiver's diminishing sensitivity. Without loss aversion, the babbling equilibrium is essentially unique. More loss-averse receivers may enjoy higher equilibrium news-utility , contrary to the commitment case .
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A sender lacking commitment powercan only credibly convey partial good news when the receiveris sufficiently loss averse. With diminishing sensitivitybut no
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