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Strategic Information Acquisition in Networked Groups with "Informational Spillovers"

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  • Antonio Jimenez-Martinez

    ()
    (Department of Economics and Finance, Universidad de Guanajuato)

Abstract

This paper develops a model of costly information acquisition by agents who are connected through a network. For a exogenously given network, each agent decides fi rst on information acquisition from his neighbors and then, after processing the information acquired, takes an action. Each agent is concerned about the extent to which other agents align their actions with the underlying state. A new equilibrium notion, which is in the spirit of perfect Bayesian equilibrium, is proposed to analyze information acquisition decisions within networked groups. This equilibrium notion allows each agent to compute, when deciding about information acquisition, the extent to which changes in his information acquisition decision will a ffect his own perception of future expected payo s. Agents anticipate and incorporate such changes in their information acquisition decisions. Both the efficient and the equilibrium information acquisition pro les are characterized and the compatibility between them is related to the density of the network.

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Bibliographic Info

Paper provided by Universidad de Guanajuato, Department of Economics and Finance in its series Department of Economics and Finance Working Papers with number EC200801.

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Length: 39 pages
Date of creation: Oct 2007
Date of revision: Oct 2008
Handle: RePEc:gua:wpaper:ec200801

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Related research

Keywords: Incomplete Information; Information Acquisition; Communication Networks; Informational Spillovers; Coordination;

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  1. George-Marios Angeletos & Alessandro Pavan, 2007. "Efficient Use of Information and Social Value of Information," Econometrica, Econometric Society, vol. 75(4), pages 1103-1142, 07.
  2. Harsanyi, John C., 1994. "Games with Incomplete Information," Nobel Prize in Economics documents 1994-1, Nobel Prize Committee.
  3. Matthew O. Jackson & Asher Wolinsky, 1994. "A Strategic Model of Social and Economic Networks," Discussion Papers 1098, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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  7. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-51, November.
  8. Antoni Calvó-Armengol & Matthew O. Jackson, 2003. "Networks in Labor Markets: Wage and Employment Dynamics and Inequality," Working Papers 55, Barcelona Graduate School of Economics.
  9. Stephen Morris & Hyun Song Shin, 2002. "Social Value of Public Information," American Economic Review, American Economic Association, vol. 92(5), pages 1521-1534, December.
  10. Allen, Beth, 1983. "Neighboring information and distributions of agents' characteristics under uncertainty," Journal of Mathematical Economics, Elsevier, vol. 12(1), pages 63-101, September.
  11. Antoni Calvó-Armengol & Joan de Martí, 2007. "Communication Networks: Knowledge and Decisions," American Economic Review, American Economic Association, vol. 97(2), pages 86-91, May.
  12. Allen, Beth, 1986. "The Demand for (Differentiated) Information," Review of Economic Studies, Wiley Blackwell, vol. 53(3), pages 311-23, July.
  13. Antonio Jiménez-Martínez, 2006. "A model of interim information sharing under incomplete information," International Journal of Game Theory, Springer, vol. 34(3), pages 425-442, October.
  14. Wilson, Charles, 1977. "A model of insurance markets with incomplete information," Journal of Economic Theory, Elsevier, vol. 16(2), pages 167-207, December.
  15. Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
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