Does it pay to voluntarily disclose private information?

Dima Leshchinskii

No 734, HEC Research Papers Series from HEC Paris

Abstract: This paper studies how strategic interaction between players can influence their decisions as to whether to acquire information and whether to reveal their private information to others. We show how a player can increase his utility by disclosing part of his private information, when such disclosure stimulates others to produce new information that is useful for him. We derive conditions for information disclosure to be the equilibrium strategy and solve for the equilibrium.

When both traders are risk-neutral they each increase their profits by specializing in the types of information they acquire. This specialization encourages the traders to share information directly or through trades. When the traders have different risk preferences, the more risk averse trader may prefer to reveal his less precise information in order to stimulate information production by less risk averse traders. This strategy can give him higher utility than if he merely acquired information by himself.

Keywords: information acquisition; market microstructure; private information (search for similar items in EconPapers)
JEL-codes: D82 D83 G12 G14 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2001-06-01
New Economics Papers: this item is included in nep-acc and nep-cdm
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.hec.fr/var/fre/storage/original/applica ... 434642e8c7fbaa21.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:0734

Access Statistics for this paper

More papers in HEC Research Papers Series from HEC Paris HEC Paris, 78351 Jouy-en-Josas cedex, France. Contact information at EDIRC.
Bibliographic data for series maintained by Antoine Haldemann ().