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Endogenous Information Acquisition in Coordination Games

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  • David P. Myatt
  • Chris Wallace

Abstract

In the context of a "beauty contest" coordination game (in which pay-offs depend on the proximity of actions to an unobserved state variable and to the average action) players choose how much costly attention to pay to various informative signals; they endogenously select information sources and how carefully to listen to them. Each signal has an underlying accuracy (how precisely it identifies the state variable) and a clarity (how easy it is for players to understand what the signal says). The unique information-acquisition equilibrium has interesting properties: only a subset of signals are assigned positive weight and attention; these are the clearest signals available, even if such signals have poor underlying accuracy; the size of the subset shrinks as the complementarity of players' actions becomes more acute; and, if actions are more complementary, the information endogenously acquired in equilibrium is more public in nature.

Suggested Citation

  • David P. Myatt & Chris Wallace, 2009. "Endogenous Information Acquisition in Coordination Games," Economics Series Working Papers 445, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:445
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    References listed on IDEAS

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    More about this item

    Keywords

    Coordination games; Information acquisition; Publicity; Beauty-contest games;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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