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Searching for information

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  • Han, Jungsuk
  • Sangiorgi, Francesco

Abstract

This paper provides a search-based information acquisition framework using an urn model with an asymptotic approach. The underlying intuition of the model is simple: when the scope of information search is more limited, marginal search efforts produce less useful information due to redundancy, but commonality of information among different agents increases. Consequently, limited information searchability induces a trade-off between an information source's precision and its commonality. In a “beauty contest” game with endogenous information acquisition, this precision-commonality trade-off generates non-fundamental volatility through the channel of information acquisition.

Suggested Citation

  • Han, Jungsuk & Sangiorgi, Francesco, 2018. "Searching for information," Journal of Economic Theory, Elsevier, vol. 175(C), pages 342-373.
  • Handle: RePEc:eee:jetheo:v:175:y:2018:i:c:p:342-373
    DOI: 10.1016/j.jet.2018.01.021
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    Cited by:

    1. Myatt, David P. & Wallace, Chris, 2019. "Information acquisition and use by networked players," Journal of Economic Theory, Elsevier, vol. 182(C), pages 360-401.
    2. Vives, Xavier & Yang, Liyan, 2017. "Costly Interpretation of Asset Prices," CEPR Discussion Papers 12360, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Information acquisition; Information search; Commonality of information; Urn model; Coordination games;

    JEL classification:

    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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