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Social Value of Public Information

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  • Stephen Morris
  • Hyun Song Shin

Abstract

What are the welfare effects of enhanced dissemination of public information through the media and disclosures by market participants with high public visibility? We examine the impact of public information in a setting where agents take actions appropriate to the underlying fundamentals, but they also have a coordination motive arising from a strategic complementarity in their actions. When the agents have no socially valuable private information, greater provision of public information always increases welfare. However, when agents also have access to independent sources of information, the welfare effect of increased public disclosures is ambiguous.

Suggested Citation

  • Stephen Morris & Hyun Song Shin, 2002. "Social Value of Public Information," American Economic Review, American Economic Association, vol. 92(5), pages 1521-1534, December.
    • Handle: RePEc:aea:aecrev:v:92:y:2002:i:5:p:1521-1534
    Note: DOI: 10.1257/000282802762024610
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    References listed on IDEAS

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