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Strategic Information Acquisition in Networked Groups with "Informational Spillovers"

  • Antonio Jimenez-Martinez

    ()

    (Department of Economics and Finance, Universidad de Guanajuato)

This paper develops a model of costly information acquisition by agents who are connected through a network. For a exogenously given network, each agent decides fi rst on information acquisition from his neighbors and then, after processing the information acquired, takes an action. Each agent is concerned about the extent to which other agents align their actions with the underlying state. A new equilibrium notion, which is in the spirit of perfect Bayesian equilibrium, is proposed to analyze information acquisition decisions within networked groups. This equilibrium notion allows each agent to compute, when deciding about information acquisition, the extent to which changes in his information acquisition decision will a ffect his own perception of future expected payo s. Agents anticipate and incorporate such changes in their information acquisition decisions. Both the efficient and the equilibrium information acquisition pro les are characterized and the compatibility between them is related to the density of the network.

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File URL: http://economia.ugto.org/WorkingPapers/EC200801.pdf
File Function: Revised Version, 2008
Download Restriction: no

Paper provided by Universidad de Guanajuato, Department of Economics and Finance in its series Department of Economics and Finance Working Papers with number EC200801.

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Length: 39 pages
Date of creation: Oct 2007
Date of revision: Oct 2008
Handle: RePEc:gua:wpaper:ec200801
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Web page: http://economia.ugto.org/
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  1. Chakraborty, Archishman & Harbaugh, Rick, 2007. "Comparative cheap talk," Journal of Economic Theory, Elsevier, vol. 132(1), pages 70-94, January.
    • Archishman Chakraborty & Rick Harbaugh, 2004. "Comparative Cheap Talk," Working Papers 2004-08, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  2. Calvo-Armengol, Antoni & Jackson, Matthew O., 2007. "Networks in labor markets: Wage and employment dynamics and inequality," Journal of Economic Theory, Elsevier, vol. 132(1), pages 27-46, January.
  3. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
  4. Bloch, Francis & Dutta, Bhaskar, 2009. "Communication networks with endogenous link strength," Games and Economic Behavior, Elsevier, vol. 66(1), pages 39-56, May.
  5. Gilat Levy & Ronny Razin, 2007. "On the Limits of Communication in Multidimensional Cheap Talk: A Comment," Econometrica, Econometric Society, vol. 75(3), pages 885-893, 05.
  6. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
  7. Wilson, Charles, 1977. "A model of insurance markets with incomplete information," Journal of Economic Theory, Elsevier, vol. 16(2), pages 167-207, December.
  8. Michael Suk-Young Chwe, 2000. "Communication and Coordination in Social Networks," Review of Economic Studies, Oxford University Press, vol. 67(1), pages 1-16.
  9. Beth Allen, 1986. "The Demand for (Differentiated) Information," Review of Economic Studies, Oxford University Press, vol. 53(3), pages 311-323.
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