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Gurus, Opinion Polls and Social Learning

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Author Info

  • Nicolas Melissas

    ()
    (Centro de Investigacion Economica (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM))

Abstract

This paper analyzes cheap talk in an investment model with information externalities. In contrast to Gossner and Melissas (2006), I allow for (i) competition effects, (ii) positive network externalities and (iii) more than one interviewed player. In the presence of competition effects, a player will never truthfully reveal her information about the realized state of the world. In the presence of positive network externalities, however, there exists a parameter range where, under mild additional conditions, the unique equilibrium is the separating one. Finally, using numerical computations, I show that for a sufficiently large number of interviewed players there exists a separating equilibrium in my entire parameter range.

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File URL: http://ftp.itam.mx/pub/academico/inves/melissas/07-03.pdf
File Function: First version, 2007
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Bibliographic Info

Paper provided by Centro de Investigacion Economica, ITAM in its series Working Papers with number 0703.

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Length: 41 pages
Date of creation: Jan 2007
Date of revision:
Handle: RePEc:cie:wpaper:0703

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Related research

Keywords: Cheap Talk; Information Externality; Social Learning; Herd Behaviour;

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