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Knowing What Others Know: Coordination Motives in Information Acquisition

  • Laura Veldkamp
  • Christian Hellwig

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.

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File URL: http://pages.stern.nyu.edu/~lveldkam/pdfs/InfoCoord.pdf
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Paper provided by New York University, Leonard N. Stern School of Business, Department of Economics in its series Working Papers with number 06-14.

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Date of creation: 2006
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Handle: RePEc:ste:nystbu:06-14
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New York University, Leonard N. Stern School of Business, Department of Economics, 44 West 4th Street, New York, NY 10012-1126

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Fax: (212) 995-4218
Web page: http://w4.stern.nyu.edu/economics/

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