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Title:Optimal degree of public information dissemination PDF Logo
Authors:Cornand, Camille
Heinemann, Frank
Issue Date:2004
Series/Report no.:CESifo working papers 1353
Abstract:In currency exchange markets, there is a conflict between individual decisions and the socially optimal solution. Whereas agents have a coordination motive to take the same position, at the social level effective market coordination per se is not socially valuable, and the central bank aims at driving agents? actions as close as possible to the economic fundamental state. Some studies argue that it might be better to withhold public information because its potential to serve as a focal point induces agents to exaggerate the importance of public announcements. This paper shows that public information should always be provided with maximum precision, but under certain condition not to all agents. Restrictions on the degree of publicity are a better instrument with which to prevent the negative welfare effects of public announcements than restrictions on their precision are. The optimal degree of publicity is always positive.
Subjects:transparency
public information
private information
common p-beliefs
coordination
strategic complementarity
JEL:F31
D82
C73
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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