The Social Value of Public Information with Costly Private Information

Gianluca Femminis and Luca Colombo

No 405, 2007 Meeting Papers from Society for Economic Dynamics

Abstract: In a beauty contest framework, we show that a more precise public information is welfare enhancing when increasing the precision of private information is costly. The accuracy of public information is chosen by the public authority taking into account that an increase in the precision of public information reduces the incentives for private acquisition of information, thereby inducing socially valuable savings of private resources.

Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed007:405

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