Global vs. Local Information

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Global vs. Local Information

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Leonardo Boncinelli ()

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Leonardo Boncinelli

Abstract

In this paper I apply stochastic stability to compare local information to global information in terms of welfare. Under global information agents potentially imitate anyone else, while under local information choices are grouped into information sets and agents can observe and hence imitate only those within their own information set. The welfare evaluation of information is ambiguous over finite time horizons, while in the long run less (more) information is better in the presence of pure negative (positive) spillovers. However, when a selection issue is considered a further ambiguity emerges making the comparison, in general, uncertain.

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Paper provided by Department of Economics, University of Siena in its series Department of Economics University of Siena with number 520.

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Date of creation: Oct 2007
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Handle: RePEc:usi:wpaper:520

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Find related papers by JEL classification:
D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology

This paper has been announced in the following NEP Reports:

NEP-ALL-2007-11-17 (All new papers)
NEP-DCM-2007-11-17 (Discrete Choice Models)

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