Acquisition, (Mis)use and Dissemination of Information The Blessing of Cursedness and Transparency

We study strategic interactions when players observe equilibrium statistics, focusing on First, their endogenous precision as signals of the fundamental; and second, agents’ well-documented difficulty in learning from such signals. We define the novel notion of cursed expectations equilibrium with information acquisition which disciplines information acquisition in a setting with incorrect learning by means of a subjective envelope condition: agents correctly anticipate their actions but incorrectly deem them optimal. Cursed agents use and acquire more private information, which counteracts suboptimal information dissemination and increases welfare. Transparency crowds out private information but is always beneficial; other policy instruments have paradoxical effects.