Optimal Degree of Public Information Dissemination

Camille Cornand and Frank Heinemann

No 1353, CESifo Working Paper Series from CESifo

Abstract: In currency exchange markets, there is a conflict between individual decisions and the socially optimal solution. Whereas agents have a coordination motive to take the same position, at the social level effective market coordination per se is not socially valuable, and the central bank aims at driving agents’ actions as close as possible to the economic fundamental state. Some studies argue that it might be better to withhold public information because its potential to serve as a focal point induces agents to exaggerate the importance of public announcements. This paper shows that public information should always be provided with maximum precision, but under certain condition not to all agents. Restrictions on the degree of publicity are a better instrument with which to prevent the negative welfare effects of public announcements than restrictions on their precision are. The optimal degree of publicity is always positive.

Keywords: transparency; public information; private information; common p-beliefs; coordination; strategic complementarity (search for similar items in EconPapers)
JEL-codes: C73 D82 F31 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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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 (2006)
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