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Knowing what others Know: Coordination motives in information acquisition

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  • Christian Hellwig

    () (Department of Economics University of California Los Angeles)

  • Laura Veldkamp

Abstract

When a large number of agents play a game with strategic complementarity, information choices exhibit strategic complementarity as well: If an agent wants to do what others do, then they want to know what others know. Likewise, strategic substitutability in actions produces strategic substitutability in information acquisition. The uniqueness or multiplicity of coordination game equilibria depends on whether information choice is discrete or continuous and whether the information is public or private. We use these results to explore how optimal information choices change the dynamic predictions of well-known macroeconomic theories.

Suggested Citation

  • Christian Hellwig & Laura Veldkamp, 2006. "Knowing what others Know: Coordination motives in information acquisition," 2006 Meeting Papers 361, Society for Economic Dynamics.
  • Handle: RePEc:red:sed006:361
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    More about this item

    Keywords

    Costly Information Acquisition; strategic complements; multiple equilibria;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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