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Information acquisition and welfare in network games

C. Matthew Leister

Games and Economic Behavior, 2020, vol. 122, issue C, 453-475

Abstract: This paper studies information acquisition and use in network games. The network structure incorporates both strategic complements (positive links) and substitutes (negative links). An information-use game played on a correlation-adjusted network is derived. Equilibrium inefficiencies in both acquisition and use of information are characterized. Inefficient bunching obtains in information acquisition, where the spread in equilibrium signal precisions is below that prescribed by the planner. The welfare analysis offers a policy intervention publicizing players' information investments. The more linked a player is, positively or negatively, the more strongly they respond to the policy to influence others' information acquisition and use.

Keywords: Centrality; Endogenous information; Network games; Welfare (search for similar items in EconPapers)
JEL-codes: C72 D21 D82 D85 G14 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.geb.2020.05.006

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