This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Informational Externalities, Strategic Delay, and the Search for Optimal Policy

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Doyle, Matthew

Additional information is available for the following registered author(s):

Abstract

This paper examines optimal policy when agents, private investors and a government, can learn about the economy by observing others. Investors can delay investment in order to exploit future information. Importantly, investors ignore the informational value of their actions to others when deciding: this externality results in inefficiently high delay, motivating government intervention. The government searches for the optimal policy, while learning about the economy. Complications arise since investors are aware of any systematic component to policy and may respond perversely to government initiatives. The paper characterizes the optimal government policy and shows that the government achieves its desired outcome.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.econ.iastate.edu/research/webpapers/paper_10046_02012.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 10046.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: 25 Sep 2002
Date of revision:
Handle: RePEc:isu:genres:10046

Contact details of provider:
Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Email:
Web page: http://www.econ.iastate.edu
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Stephanie Bridges).

Related research
Keywords:

Find related papers by JEL classification:
D8 - Microeconomics - - Information, Knowledge, and Uncertainty
E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Cremer, Jacques, 1982. "A simple proof of Blackwell's "comparison of experiments" theorem," Journal of Economic Theory, Elsevier, vol. 27(2), pages 439-443, August. [Downloadable!] (restricted)
  2. Chamley, Christophe & Gale, Douglas, 1994. "Information Revelation and Strategic Delay in a Model of Investment," Econometrica, Econometric Society, vol. 62(5), pages 1065-85, September. [Downloadable!] (restricted)
    Other versions:
  3. Caplin, Andrew & Leahy, John V, 1993. "Sectoral Shocks, Learning, and Aggregate Fluctuations," Review of Economic Studies, Blackwell Publishing, vol. 60(4), pages 777-94, October. [Downloadable!] (restricted)
  4. Caplin, Andrew & Leahy, John, 1994. "Business as Usual, Market Crashes, and Wisdom after the Fact," American Economic Review, American Economic Association, vol. 84(3), pages 548-65, June. [Downloadable!] (restricted)
    Other versions:
  5. Christophe Chamley, 2003. "Dynamic Speculative Attacks," American Economic Review, American Economic Association, vol. 93(3), pages 603-621, June. [Downloadable!]
  6. Christophe Chamley, 2002. "Dynamic Speculative Attacks," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-119, Boston University - Department of Economics. [Downloadable!]
  7. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October. [Downloadable!] (restricted)
  8. Sulganik, Eyal & Zilcha, Itzhak, 1997. "The value of information: The case of signal-dependent opportunity sets," Journal of Economic Dynamics and Control, Elsevier, vol. 21(10), pages 1615-1625, August. [Downloadable!] (restricted)
  9. V. V. Chari & Patrick J. Kehoe, 2002. "On the robustness of herds," Working Papers 622, Federal Reserve Bank of Minneapolis. [Downloadable!]
  10. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 797-817, August. [Downloadable!] (restricted)
  11. V. V. Chari & Patrick J. Kehoe, 2000. "Financial crises as herds," Working Papers 600, Federal Reserve Bank of Minneapolis.
  12. Bertocchi, Graziella & Spagat, Michael, 1993. "Learning, experimentation, and monetary policy," Journal of Monetary Economics, Elsevier, vol. 32(1), pages 169-183, August. [Downloadable!] (restricted)
    Other versions:
  13. Schivardi, Fabiano, 2003. "Reallocation and learning over the business cycle," European Economic Review, Elsevier, vol. 47(1), pages 95-111, February. [Downloadable!] (restricted)
    Other versions:
  14. Caplin, Andrew & Leahy, John, 1996. "Monetary Policy as a Process of Search," American Economic Review, American Economic Association, vol. 86(4), pages 689-702, September. [Downloadable!] (restricted)
  15. Lones Smith & Peter Norman Sorensen, 2006. "Informational Herding and Optimal Experimentation," Cowles Foundation Discussion Papers 1552, Cowles Foundation, Yale University. [Downloadable!]
    Other versions:
  16. Rob, Rafael, 1991. "Learning and Capacity Expansion under Demand Uncertainty," Review of Economic Studies, Blackwell Publishing, vol. 58(4), pages 655-75, July. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Lones Smith & Peter Norman Sorensen, 2006. "Informational Herding and Optimal Experimentation," Cowles Foundation Discussion Papers 1552, Cowles Foundation, Yale University. [Downloadable!]
    Other versions:
Statistics
Access and download statistics

Did you know? All bibliographic data on IDEAS has been put in the public domain by the publishers.

This page was last updated on 2009-11-21.


This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.