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Knowing what others Know: Coordination motives in information acquisition

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  • Christian Hellwig

    ()
    (Department of Economics University of California Los Angeles)

  • Laura Veldkamp

Abstract

When a large number of agents play a game with strategic complementarity, information choices exhibit strategic complementarity as well: If an agent wants to do what others do, then they want to know what others know. Likewise, strategic substitutability in actions produces strategic substitutability in information acquisition. The uniqueness or multiplicity of coordination game equilibria depends on whether information choice is discrete or continuous and whether the information is public or private. We use these results to explore how optimal information choices change the dynamic predictions of well-known macroeconomic theories.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2006 Meeting Papers with number 361.

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Date of creation: 03 Dec 2006
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Handle: RePEc:red:sed006:361

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Keywords: Costly Information Acquisition; strategic complements; multiple equilibria;

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