EconPapers    
Economics at your fingertips  
 

Optimal public information dissemination: Introducing observational learning into a generalized beauty contest

Hendrik Hüning and Lukas Meub

No 169, HWWI Research Papers from Hamburg Institute of International Economics (HWWI)

Abstract: We develop a dynamic two-period generalized beauty contest to study the optimal level of publicity when disclosed information is subject to multiplier effects inherent to social learning. We build upon the static case, where all agents receive a private signal about an unknown fundamental state and only a fraction of all agents receive an additional public signal. However, in our model, agents no longer act simultaneously; rather, agents informed by both signals act in the first period, while those uninformed about the public signal delay their action and learn about informed agents' actions. We show that in the unique equilibrium of our dynamic game, informed agents overreact more strongly to public signals. The optimal dissemination of public information is thus considerably lower than the static case suggests. If the social learning signal is reasonably precise, aggregate welfare is higher than in the static case. Our results hold relevance for the optimal information policy design of public authorities.

Keywords: generalized beauty contest; monetary policy; optimal communication; social learning; strategic complementarities (search for similar items in EconPapers)
JEL-codes: D82 D83 E5 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-mac and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/121865/1/837953480.pdf (application/pdf)

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:zbw:hwwirp:169

Access Statistics for this paper

More papers in HWWI Research Papers from Hamburg Institute of International Economics (HWWI) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().

 
Page updated 2020-06-12
Handle: RePEc:zbw:hwwirp:169