Optimal Degree of Public Information Dissemination

Camille Cornand and Frank Heinemann

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: Financial markets and macroeconomic environments are often characterized by positive externalities. In these environments, transparency may reduce expected welfare from an ex-ante point of view: public announcements serve as a focal point for higher-order beliefs and affect agents’ behaviour more than justified by their informational contents. Some scholars conclude that it might be better to reduce the precision of public signals or entirely withhold information. This paper shows that public information should always be provided with maximum precision, but under certain conditions not to all agents. Restricting the degree of publicity is a better-suited instrument for preventing the negative welfare effects of public announcements than restrictions on their precision are.

Keywords: Transparency; public information; private information; coordination; strategic complementarity (search for similar items in EconPapers)
JEL-codes: C73 D82 F31 (search for similar items in EconPapers)
Date: 2006-02
New Economics Papers: this item is included in nep-cba and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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https://epub.ub.uni-muenchen.de/13393/1/158.pdf (application/pdf)

Related works:
Journal Article: Optimal Degree of Public Information Dissemination (2008)
Journal Article: Optimal Degree of Public Information Dissemination (2008)
Working Paper: Optimal Degree of Public Information Dissemination (2008)
Working Paper: Optimal Degree of Public Information Dissemination (2006)
Working Paper: Optimal Degree of Public Information Dissemination (2006)
Working Paper: Optimal Degree of Public Information Dissemination (2006)
Working Paper: Optimal Degree of Public Information Dissemination (2004)
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