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The Social Value of Public Information with Costly Private Information

Author

Listed:
  • Gianluca Femminis

    (Università Cattolica Milano)

  • Luca Colombo

    (Università Cattolica, Milano)

Abstract

In a beauty contest framework, we show that a more precise public information is welfare enhancing when increasing the precision of private information is costly. The accuracy of public information is chosen by the public authority taking into account that an increase in the precision of public information reduces the incentives for private acquisition of information, thereby inducing socially valuable savings of private resources.

Suggested Citation

  • Gianluca Femminis & Luca Colombo, 2007. "The Social Value of Public Information with Costly Private Information," 2007 Meeting Papers 405, Society for Economic Dynamics.
    • Handle: RePEc:red:sed007:405
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    References listed on IDEAS

    as
    1. Camille Cornand & Frank Heinemann, 2008. "Optimal Degree of Public Information Dissemination," Economic Journal, Royal Economic Society, vol. 118(528), pages 718-742, April.
    2. Christian Hellwig, 2004. "Heterogeneous Information and the Benefits of Public Information Disclosures (October 2005)," UCLA Economics Online Papers 283, UCLA Department of Economics.
    3. Stephen Morris & Hyun Song Shin & Hui Tong, 2006. "Social Value of Public Information: Morris and Shin (2002) Is Actually Pro-Transparency, Not Con: Reply," American Economic Review, American Economic Association, vol. 96(1), pages 453-455, March.
    4. Lars E. O. Svensson, 2006. "Social Value of Public Information: Comment: Morris and Shin (2002) Is Actually Pro-Transparency, Not Con," American Economic Review, American Economic Association, vol. 96(1), pages 448-452, March.
    5. Stephen Morris & Hyun Song Shin, 2002. "Social Value of Public Information," American Economic Review, American Economic Association, vol. 92(5), pages 1521-1534, December.
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