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Information acquisition and welfare in network games

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  • Leister, C. Matthew

Abstract

This paper studies information acquisition and use in network games. The network structure incorporates both strategic complements (positive links) and substitutes (negative links). An information-use game played on a correlation-adjusted network is derived. Equilibrium inefficiencies in both acquisition and use of information are characterized. Inefficient bunching obtains in information acquisition, where the spread in equilibrium signal precisions is below that prescribed by the planner. The welfare analysis offers a policy intervention publicizing players' information investments. The more linked a player is, positively or negatively, the more strongly they respond to the policy to influence others' information acquisition and use.

Suggested Citation

  • Leister, C. Matthew, 2020. "Information acquisition and welfare in network games," Games and Economic Behavior, Elsevier, vol. 122(C), pages 453-475.
    • Handle: RePEc:eee:gamebe:v:122:y:2020:i:c:p:453-475
    DOI: 10.1016/j.geb.2020.05.006
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    1. Mariann Ollar & Antonio Penta, 2021. "A network solution to robust implementation: The case of identical but unknown distributions," Economics Working Papers 1776, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Takashi Ui, 2022. "Optimal and Robust Disclosure of Public Information," Papers 2203.16809, arXiv.org, revised Apr 2022.
    3. Takashi Ui, 2022. "Optimal and Robust Disclosure of Public Information," Working Papers on Central Bank Communication 039, University of Tokyo, Graduate School of Economics.

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    More about this item

    Keywords

    Centrality; Endogenous information; Network games; Welfare;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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