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Coordination Incentives for Information Acquisition with a Finite Set of Players

Author

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  • Antonio Jiménez-Martínez

    (Division of Economics, CIDE)

Abstract

We consider a class of two-player quadratic games under incomplete information to study the relation between exogenous coordination motives and strategic interactions in information acquisition. The players make decisions in two stages. They decide about information acquisition in the first stage and choose their actions in the second stage. Preferences are such that the optimal action of each player depends on the state of the world and on the action taken by the other player. We show that if the degree of coordination in actions is sufficiently high, then the strategic interaction in the information choice does not have the same coordination motives as the action choice. Consequently, heterogeneous beliefs can be sustained endogenously for our class of games if the degree of complementarity or substitutability is high enough. Our results contrast qualitatively with the case studied by Hellwig and Veldkamp (2009) where the set of players is a continuum

Suggested Citation

  • Antonio Jiménez-Martínez, 2011. "Coordination Incentives for Information Acquisition with a Finite Set of Players," Working Papers DTE 497, CIDE, División de Economía.
    • Handle: RePEc:emc:wpaper:dte497
    as

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    File URL: http://www.economiamexicana.cide.edu/RePEc/emc/pdf/DTE/DTE497.pdf
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    References listed on IDEAS

    as
    1. Camille Cornand & Frank Heinemann, 2008. "Optimal Degree of Public Information Dissemination," Economic Journal, Royal Economic Society, vol. 118(528), pages 718-742, April.
    2. Russell Cooper & Andrew John, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(3), pages 441-463.
    3. George-Marios Angeletos & Alessandro Pavan, 2007. "Efficient Use of Information and Social Value of Information," Econometrica, Econometric Society, vol. 75(4), pages 1103-1142, July.
    4. Dirk Bergemann & Juuso Valimaki, 2002. "Information Acquisition and Efficient Mechanism Design," Econometrica, Econometric Society, vol. 70(3), pages 1007-1033, May.
    5. Beth Allen, 1986. "The Demand for (Differentiated) Information," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(3), pages 311-323.
    6. Stephen Morris & Hyun Song Shin, 2005. "Central Bank Transparency and the Signal Value of Prices," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 36(2), pages 1-66.
    7. Camille Cornand & Frank Heinemann, 2008. "Optimal Degree of Public Information Dissemination," Economic Journal, Royal Economic Society, vol. 118(528), pages 718-742, April.
    8. Christian Hellwig & Laura Veldkamp, 2009. "Knowing What Others Know: Coordination Motives in Information Acquisition," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(1), pages 223-251.
    9. Allen, Beth, 1983. "Neighboring information and distributions of agents' characteristics under uncertainty," Journal of Mathematical Economics, Elsevier, vol. 12(1), pages 63-101, September.
    10. Antoni Calvó-Armengol & Joan de Martí, 2007. "Communication Networks: Knowledge and Decisions," American Economic Review, American Economic Association, vol. 97(2), pages 86-91, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Incomplete information; information acquisition; coordination;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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