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Searching for information

Jungsuk Han and Francesco Sangiorgi ()

Journal of Economic Theory, 2018, vol. 175, issue C, 342-373

Abstract: This paper provides a search-based information acquisition framework using an urn model with an asymptotic approach. The underlying intuition of the model is simple: when the scope of information search is more limited, marginal search efforts produce less useful information due to redundancy, but commonality of information among different agents increases. Consequently, limited information searchability induces a trade-off between an information source's precision and its commonality. In a “beauty contest” game with endogenous information acquisition, this precision-commonality trade-off generates non-fundamental volatility through the channel of information acquisition.

Keywords: Information acquisition; Information search; Commonality of information; Urn model; Coordination games (search for similar items in EconPapers)
JEL-codes: C65 D80 D81 D83 (search for similar items in EconPapers)
Date: 2018
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