[Link to paper] [Online Appendix] 

Abstract: We study optimal adversarial information design in a dynamic regime change game. Agents decide when to attack, if at all. We assume (1) delay incurs a continuous cost and (2) agents doubt the correctness of their actions. The game may end in a ``disaster'' due to weak fundamentals or panic --- agents attacking despite sound fundamentals. We propose a ``timely disaster alert'' that promptly warns about impending disasters, making waiting for and following the alert the unique rationalizable strategy, thereby eliminating panic. We relate this optimal policy to early warning systems such as bank stress tests and debt sustainability analysis. 

Presentation: (By one of the authors) Peking University, Tsinghua University, Asian Meeting of the Econometric Society (Xiamen), Tsinghua Theory and Finance workshop, North American meeting of the Econometric Society (Seattle), 30th Game Theory meeting (Stony Brook), European meeting of the Econometric Society (Manchester), NYU Shanghai, UPF, Fudan, SMU, NUS, U Kansas, Indiana Kelley, Rochester Simon, UIUC, Utah Eccles, Baruch Zicklin, Ashoka, Michigan State, Stevens, Minnesota-Chicago Accounting Conference