Strategic Information Disclosure to be imitated under Informational and Payoff Externality

This paper attempts to provide an answer to the question of why agents in competition are often willing to disclose private information. I present a simple model demonstrating that information can be disclosed intentionally to induce imitation. In the model, three players who are heterogeneous in terms of information quality forecast the unknown true state. The payoffs, which depend on the correctness of the forecast, are shared if players' forecasts are identical. The result shows that, in a risk-dominant equilibrium, neither the most-informed nor the least-informed player discloses his information. On the other hand, the mediocre less-informed player is willing to disclose information, as long as the quality of his information is relatively low compared to that of the most-informed player, in order to induce imitation. By inducing the least-informed player to make an identical forecast, the mediocre less-informed player can avoid the worst case in which he is penalized alone. This result suggests that a revealing equilibrium can arise in a setting with multiple players without asymmetry in the payoff structure or a costly waiting option, in contrast to the two player case that has been widely adopted in the literature.