The social value of public information with costly information acquisition

Colombo, Luca; Femminis, Gianluca

doi:10.1016/j.econlet.2008.01.009

Cited by 25 publications

(56 citation statements)

References 6 publications

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“…1 In particular, Colombo and Femminis (2008) reach the opposite conclusion by allowing agents to choose the precision of private information given the precision of public information. They show that welfare necessarily increases with public information if the cost of the precision is linear.…”

Section: Introductionmentioning

confidence: 99%

“…They give a sufficient condition guaranteeing that the former is positive whenever the latter is positive and show that the model of Colombo and Femminis (2008) satisfies the condition. Their condition is based upon a comparison between the equilibrium and the socially optimal strategy profile.…”

Section: Introductionmentioning

confidence: 99%

“…The purpose of this paper is to reconcile the anti-transparency result with exogenous precision and the pro-transparency result with endogenous precision by incorporating general nonlinear costs in the model of Colombo and Femminis (2008).…”

Section: Introductionmentioning

confidence: 99%

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The social value of public information with convex costs of information acquisition

2014

Economics Letters

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In a beauty contest framework, welfare can decrease with public information if the precision of private information is exogenous, whereas welfare necessarily increases with public information if the precision is endogenous with linear costs of information acquisition. The purpose of this paper is to reconcile these results by considering nonlinear costs of information acquisition. The main result of this paper is a necessary and sufficient condition for welfare to increase with public information. Using it, we show that costs of information acquisition are linear if and only if welfare necessarily increases with public information. Thus, welfare can decrease with public information for any strictly convex costs. This is because convex costs mitigate the so-called crowding-out effect of public information on private information, thereby making the social value of public information with endogenous precision closer to that with exogenous precision.JEL classification: C72, D82, E10.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The social value of public information with convex costs of information acquisition

2014

Economics Letters

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“…Examples include Colombo and Femminis (2008), Dewan and Myatt (2008), Hellwig andVeldkamp (2009), Hagenbach andKoessler (2010), and Myatt and Wallace (2012), in which underlying games are type +I or +II. However, private collection of information and aggregation of information may have di↵erent e↵ects on the expected payo↵ depending upon the types.…”

Section: Discussionmentioning

confidence: 99%

“…AP characterize both the unique Bayesian Nash equilibrium and the socially optimal 1 Several authors challenge the anti-transparency result considering di↵erent methods of information dissemination. See Colombo and Femminis (2008), Cornand and Heinemann (2008), Myatt and Wallace (2010), and Arato and Nakamura (2012), among others. In contrast, James and Lawler (2011) strengthen MS's conclusion.…”

Section: Introductionmentioning

confidence: 99%

Characterizing social value of information

Yoshizawa

2015

Journal of Economic Theory

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This paper examines the social value of information in symmetric Bayesian games with quadratic payo↵ functions and normally distributed public and private signals. The main results identify necessary and su cient conditions for welfare to increase with public or private information. Using the conditions, we classify games into eight types by welfare e↵ects of information. In the first type, welfare necessarily increases with both public and private information.In the second type, welfare can decrease, but only with public information. In the third type, welfare can decrease as well as increase with both public and private information. In the fourth type, welfare can decrease with both, but can increase only with private information. The remaining four types are the counterparts of the above four types with the opposite welfare e↵ects of information. For each type, we characterize a socially optimal information structure and a socially optimal Bayesian correlated equilibrium.JEL classification: C72, D82.

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Information acquisition interactions in two-player quadratic games

Jiménez-Martínez

2013

Int J Game Theory

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The social value of public information with costly information acquisition

Cited by 25 publications

References 6 publications

The social value of public information with convex costs of information acquisition

The social value of public information with convex costs of information acquisition

Characterizing social value of information

Information acquisition interactions in two-player quadratic games

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