Interpreting How Others Interpret It: Social Value of Public Information

Alia Gizatulina

No 3787, CESifo Working Paper Series from CESifo

Abstract: This paper studies the social value of public information in environments without common knowledge of data-generating process. We show that the stronger is the coordination motive behind agents behaviour, the more they would like to interpret private or public signals in the way that they suspect others are doing it. Consequently, the negative impact of public communication noted by Morris and Shin (2004) can be amplified if agents have doubts whether others take the public signal too literally and/or are too inattentive to their private signals. The social welfare increases when each agent evaluates the precision of public signal correctly but believes that others did not understand the public signal at all, which suggests that there is a scope for the central bank to “obliterate” its communication in a specific way, by making it, e.g., sophisticated and technical.

Keywords: central bank communication; transparency; common p-belief; coordination game; higher-order uncertainty (search for similar items in EconPapers)
JEL-codes: D82 E58 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp3787.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Unavailable

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:ces:ceswps:_3787

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().