Knowing What Others Know: Coordination Motives in Information Acquisition

40 Pages Posted: 13 Oct 2008

See all articles by Laura Veldkamp

Laura Veldkamp

New York University - Stern School of Business; National Bureau of Economic Research (NBER)

Christian Hellwig

University of Toulouse 1 - Toulouse School of Economics (TSE)

Multiple version iconThere are 3 versions of this paper

Date Written: March 2008

Abstract

We explore how optimal information choices change the predictions of strategic models.When a large number of agents play a game with strategic complementarity, information choices exhibit complementarity as well: If an agent wants to do what others do, they want to know what others know. This makes heterogeneous beliefs difficult to sustain and may generate multiple equilibria. In models with substitutability, agents prefer to differentiate their information choices. We use these theoretical results to examine the role of information choice in recentprice-setting models and to propose modeling techniques that ensure equilibrium uniqueness.

Suggested Citation

Veldkamp, Laura and Hellwig, Christian, Knowing What Others Know: Coordination Motives in Information Acquisition (March 2008). NYU Working Paper No. EC-06-14. Available at SSRN: https://ssrn.com/abstract=1281958

Laura Veldkamp (Contact Author)

New York University - Stern School of Business ( email )

44 West 4th St. - Suite 7-180
New York, NY 100012
United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Christian Hellwig

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

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