Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/97241
Authors: 
Colombo, Luca
Femminis, Gianluca
Pavan, Alessandro
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper, Center for Mathematical Studies in Economics and Management Science 1554
Abstract: 
We study information acquisition in a flexible framework with strategic complementarity or substitutability in actions and a rich set of externalities that are responsible for possible wedges between the equilibrium and the efficient acquisition of information. First, we relate the (in)efficiency in the acquisition of information to the (in)efficiency in the use of information and explain why efficiency in the use does not guarantee efficiency in the acquisition. Next, we show how the acquisition of private information affects the social value of public information (i.e., the comparative statics of equilibrium welfare with respect to the quality of public information). Finally, we illustrate the implications of our results in a few applications that include beauty contests, monetary economies with price-setting complementarities, and economies with negative production externalities.
Subjects: 
endogenous information
strategic complementarity / substitutability
externalities
efficiency
welfare
endogenous information
strategic complementarity/substitutability
externalities
efficiency
welfare
JEL: 
C72
D62
D83
E50
Document Type: 
Working Paper

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