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Majoritarian preference, utilitarian welfare and public information in Cournot oligopoly

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  • Roy, Jaideep
  • Silvers, Randy
  • Sun, Ching-Jen

Abstract

Can individual preferences for public information among heterogeneous consumers be aggregated into a meaningful social preference that does not suffer from Condorcet cycles? In a Cournot model where homogeneous producers observe a public signal about an uncertain cost of production prior to taking quantity decisions, we show that the majoritarian preference of consumers for the precision of public information is fairly well behaved so that a Condorcet winner always exists. Under a monotonicity condition on the demand function, we characterize the Condorcet-winning precision in terms of the demand function and the number of firms under which the Condorcet-winning precision (i) hurts consumers' surplus and profits or (ii) remains conflict-free. These results have interesting implications on ‘collective’ Bayesian persuasion by agencies representing consumers, showing that when full transparency maximizes expected consumers' surplus, collective Bayesian persuasion can lead to full opacity, and vice versa.

Suggested Citation

  • Roy, Jaideep & Silvers, Randy & Sun, Ching-Jen, 2019. "Majoritarian preference, utilitarian welfare and public information in Cournot oligopoly," Games and Economic Behavior, Elsevier, vol. 116(C), pages 269-288.
  • Handle: RePEc:eee:gamebe:v:116:y:2019:i:c:p:269-288
    DOI: 10.1016/j.geb.2019.05.005
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    References listed on IDEAS

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    More about this item

    Keywords

    Cournot oligopoly; Uncertain costs; Precision of public information; Majoritarian preference; Condorcet winner; Conflict; Collective Bayesian persuasion;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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