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Strategic Information Spillover to be Imitated: Incentive to Make Use of Relative Performance Evaluation

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  • Young-Ro Yoon

    () (Indiana University Bloomington)

Abstract

In this article, we deal with the topic of intentional information spillover using a model in which both informational- and payoff-externalities are present and the timing of agents' actions is endogenous. In this model, three players, who are heterogeneous in the quality of their information, compete with one another in a common task. According to the results, the weakly-informed players may voluntarily relinquish an option to wait, although no cost is imposed for a delay of action. When acting without a delay, they reveal their information with the hope that others will imitate them. This type of information spillover is due to their incentive, which is to make use of the relative performance evaluation structure under which a bad reputation can be shared if others are also wrong.

Suggested Citation

  • Young-Ro Yoon, 2007. "Strategic Information Spillover to be Imitated: Incentive to Make Use of Relative Performance Evaluation," Caepr Working Papers 2007-011, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
  • Handle: RePEc:inu:caeprp:2007011
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    Keywords

    Blame sharing; Endogenous timing of actions; Herding; Information spillover; Informational externalities; Payoff externalities;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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