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Characterizing Social Value of Information


  • Ui, Takashi
  • Yoshizawa, Yasunori


This paper examines the social value of information in symmetric Bayesian games with quadratic payoff functions and normally distributed public and private signals. The main results identify necessary and sufficient conditions for welfare to increase with public or private information. Using the conditions, we classify games into eight types by welfare effects of information. In the first type, welfare necessarily increases with both public and private information. In the second type, welfare can decrease, but only with public information. In the third type, welfare can decrease as well as increase with both public and private information. In the fourth type, welfare can decrease with both, but can increase only with private information. The remaining four types are the counterparts of the above four types with the opposite welfare effects of information. For each type, we characterize a socially optimal information structure and a socially optimal Bayesian correlated equilibrium.

Suggested Citation

  • Ui, Takashi & Yoshizawa, Yasunori, 2013. "Characterizing Social Value of Information," Discussion Papers 2013-01, Graduate School of Economics, Hitotsubashi University.
  • Handle: RePEc:hit:econdp:2013-01

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    References listed on IDEAS

    1. Nakajima, Daisuke & Masatlioglu, Yusufcan, 2013. "Choice by iterative search," Theoretical Economics, Econometric Society, vol. 8(3), September.
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    3. Mandler, Michael & Manzini, Paola & Mariotti, Marco, 2012. "A million answers to twenty questions: Choosing by checklist," Journal of Economic Theory, Elsevier, vol. 147(1), pages 71-92.
    4. Weitzman, Martin L, 1979. "Optimal Search for the Best Alternative," Econometrica, Econometric Society, vol. 47(3), pages 641-654, May.
    5. Rubinstein, Ariel & Salant, Yuval, 2006. "A model of choice from lists," Theoretical Economics, Econometric Society, vol. 1(1), pages 3-17, March.
    6. Yuval Salant, 2011. "Procedural Analysis of Choice Rules with Applications to Bounded Rationality," American Economic Review, American Economic Association, vol. 101(2), pages 724-748, April.
    7. Yıldız, Kemal, 2016. "List-rationalizable choice," Theoretical Economics, Econometric Society, vol. 11(2), May.
    8. Caplin, Andrew & Dean, Mark, 2011. "Search, choice, and revealed preference," Theoretical Economics, Econometric Society, vol. 6(1), January.
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    Cited by:

    1. repec:dpr:wpaper:0908 is not listed on IDEAS
    2. Nakamura, Tomoya, 2015. "One-leader and multiple-follower Stackelberg games with private information," Economics Letters, Elsevier, vol. 127(C), pages 27-30.
    3. Tomoya Nakamura, 2014. "One-Leader and Multiple-Follower Stackelberg Games with Private Information," ISER Discussion Paper 0908r, Institute of Social and Economic Research, Osaka University, revised Aug 2014.
    4. Myatt, David P. & Wallace, Chris, 2015. "Cournot competition and the social value of information," Journal of Economic Theory, Elsevier, vol. 158(PB), pages 466-506.

    More about this item


    Bayesian game; incomplete information; optimal information structure; potential game; private signal; public signal; team; value of information;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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