Strategic Information Spillover to be Imitated: Incentive to Make Use of Relative Performance Evaluation

Young-Ro Yoon ()
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Young-Ro Yoon: Indiana University Bloomington

No 2007-011, CAEPR Working Papers from Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington

Abstract: In this article, we deal with the topic of intentional information spillover using a model in which both informational- and payoff-externalities are present and the timing of agents' actions is endogenous. In this model, three players, who are heterogeneous in the quality of their information, compete with one another in a common task. According to the results, the weakly-informed players may voluntarily relinquish an option to wait, although no cost is imposed for a delay of action. When acting without a delay, they reveal their information with the hope that others will imitate them. This type of information spillover is due to their incentive, which is to make use of the relative performance evaluation structure under which a bad reputation can be shared if others are also wrong.

Keywords: Blame sharing; Endogenous timing of actions; Herding; Information spillover; Informational externalities; Payoff externalities (search for similar items in EconPapers)
JEL-codes: D81 D82 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2007-07
New Economics Papers: this item is included in nep-cse
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Persistent link: https://EconPapers.repec.org/RePEc:inu:caeprp:2007011

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