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Public Communication and Information Acquisition

Author

Listed:
  • Ryan Chahrour

    () (Boston College)

Abstract

This paper models the tradeoff, perceived by central banks and other public actors, between providing the public with useful information and the risk of overwhelming it with excessive communication. An information authority chooses how many signals to provide regarding an aggregate state and agents respond by choosing how many signals to observe. When agents desire coordination, the number of signals they acquire may decrease in the number released. The optimal quantity of communication is positive, but does not maximize agents' acquisition of information. In contrast to a model without information choice, the authority always prefers to provide more precise signals.

Suggested Citation

  • Ryan Chahrour, 2012. "Public Communication and Information Acquisition," Boston College Working Papers in Economics 803, Boston College Department of Economics.
  • Handle: RePEc:boc:bocoec:803
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    File URL: http://fmwww.bc.edu/EC-P/wp803.pdf
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    References listed on IDEAS

    as
    1. Venky Venkateswaran & Luis Llosa, 2012. "Efficiency With Endogenous Information Choice," 2012 Meeting Papers 660, Society for Economic Dynamics.
    2. Jacob Wong, 2008. "Information acquisition, dissemination, and transparency of monetary policy," Canadian Journal of Economics, Canadian Economics Association, vol. 41(1), pages 46-79, February.
    3. Manuel Amador & Pierre-Olivier Weill, 2010. "Learning from Prices: Public Communication and Welfare," Journal of Political Economy, University of Chicago Press, vol. 118(5), pages 866-907.
    4. Judd, Kenneth L., 1985. "The law of large numbers with a continuum of IID random variables," Journal of Economic Theory, Elsevier, vol. 35(1), pages 19-25, February.
    5. McCall, John J., 1991. "Exchangeability and its economic applications," Journal of Economic Dynamics and Control, Elsevier, vol. 15(3), pages 549-568, July.
    6. Harald Uhlig, 1996. "A law of large numbers for large economies (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(1), pages 41-50.
    7. Blinder, Alan S., 2007. "Monetary policy by committee: Why and how?," European Journal of Political Economy, Elsevier, vol. 23(1), pages 106-123, March.
    8. David P. Myatt & Chris Wallace, 2012. "Endogenous Information Acquisition in Coordination Games," Review of Economic Studies, Oxford University Press, vol. 79(1), pages 340-374.
    9. Mauro F Roca, 2010. "Transparency and Monetary Policy with Imperfect Common Knowledge," IMF Working Papers 10/91, International Monetary Fund.
    10. Nadya Malenko, 2014. "Communication and Decision-Making in Corporate Boards," Review of Financial Studies, Society for Financial Studies, vol. 27(5), pages 1486-1532.
    11. Clemens Kool & Menno Middeldorp & Stephanie Rosenkranz, 2011. "Central Bank Transparency and the Crowding Out of Private Information in Financial Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(4), pages 765-774, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ricardo Reis, 2013. "Central Bank Design," Journal of Economic Perspectives, American Economic Association, vol. 27(4), pages 17-44, Fall.
    2. Coenen, Günter & Ehrmann, Michael & Gaballo, Gaetano & Hoffmann, Peter & Nakov, Anton & Nardelli, Stefano & Persson, Eric & Strasser, Georg H., 2017. "Communication of monetary policy in unconventional times," CFS Working Paper Series 578, Center for Financial Studies (CFS).
    3. Bianchi, Milo & Jehiel, Philippe, 2015. "Financial reporting and market efficiency with extrapolative investors," Journal of Economic Theory, Elsevier, vol. 157(C), pages 842-878.
    4. George-Marios Angeletos & Chen Lian, 2016. "Incomplete Information in Macroeconomics: Accommodating Frictions in Coordination," NBER Working Papers 22297, National Bureau of Economic Research, Inc.
    5. Bezerra Bisneto, João Lídio, 2016. "Communication policy with public uncertainty," Textos para discussão 431, FGV/EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
    6. Brancati, Emanuele & Macchiavelli, Marco, 2015. "The Role of Dispersed Information in Pricing Default: Evidence from the Great Recession," Finance and Economics Discussion Series 2015-79, Board of Governors of the Federal Reserve System (U.S.).
    7. repec:eee:jmacro:v:52:y:2017:i:c:p:238-251 is not listed on IDEAS
    8. Mikael Apel & Carl Andreas Claussen & Petra Lennartsdotter & Øistein Røisland, 2015. "Monetary Policy Committees: Comparing Theory and "Inside" Information from MPC Members," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 47-89, December.
    9. Mikael Apel & Carl Andreas Claussen & Petra Gerlach-Kristen & Petra Lennartsdotter & Øistein Røisland, 2013. "Monetary policy decisions – comparing theory and “inside” information from MPC members," Working Paper 2013/03, Norges Bank.
    10. Gaetano Gaballo, 2016. "Rational Inattention to News: The Perils of Forward Guidance," American Economic Journal: Macroeconomics, American Economic Association, vol. 8(1), pages 42-97, January.
    11. Venky Venkateswaran & Luis Llosa, 2012. "Efficiency With Endogenous Information Choice," 2012 Meeting Papers 660, Society for Economic Dynamics.
    12. George-Marios Angeletos & Chen Lian, 2016. "Forward Guidance without Common Knowledge," NBER Working Papers 22785, National Bureau of Economic Research, Inc.
    13. Alessandro Pavan, 2014. "Attention, Coordination, and Bounded Recall," Discussion Papers 1576, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    14. Myatt, David P. & Wallace, Chris, 2014. "Central bank communication design in a Lucas-Phelps economy," Journal of Monetary Economics, Elsevier, vol. 63(C), pages 64-79.
    15. repec:eee:macchp:v2-1065 is not listed on IDEAS

    More about this item

    Keywords

    Transparency; Central Bank Communication; Monetary Policy; Global Games; Information Acquisition;

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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