Template-Type: ReDIF-Paper 1.0
Author-Name:  Luca Colombo
Author-X-Name-First: Luca
Author-X-Name-Last: Colombo
Author-Email: lucava.colombo@unicatt.it
Author-Workplace-Name: DISCE, Università Cattolica
Author-Name: Gianluca Femminis
Author-X-Name-First: Gianluca
Author-X-Name-Last: Femminis
Author-Email: gianluca.femminis@unicatt.it
Author-Workplace-Name: DISCE, Università Cattolica
Title: The Social Value of Public Information with Costly Information Acquisition
Abstract: In a beauty contest framework, we show that more precise public information contributes to higher welfare when the precision of private information is endogenous. We consider a Stackelberg game in which public authorities decide the accuracy of public information taking into account how this affects the acquisition of private information and the choice of individual actions in equilibrium. Because the acquisition of private information is costly, an increase in the precision of public information increases welfare by reducing the incentives for acquisition of private information, thereby inducing socially valuable savings of private resources.
Length: nn pages 16
Creation-Date: 2007-03
 
File-URL: http://www.unicatt.it/Istituti/EconomiaFinanza/Quaderni/ief0073.pdf
File-Format: Application/pdf
File-Function: First version, 2006
Number: ief0073
Classification-JEL: C70, D82, E10
Keywords: Public information, private information, coordination, welfare
Handle: RePEc:ctc:serie3:ief0073