Information Inequality and Role of Public Information
The Korean Economic Review, Accepted
25 Pages Posted: 16 Apr 2020 Last revised: 5 Nov 2021
Date Written: May 11, 2020
Transparent disclosures of public information might be one natural policy to reduce information inequality among individuals. We conduct a welfare analysis of such policy by introducing ex-ante heterogeneity in individuals' private information in a class of economies with dispersed information and strategic complementarity or substitutability. We nd that better private information for the already privately better-informed individuals increases welfare, even though it may be accompanied by greater information inequality. We also show that the better the private information for the already better-informed individuals, the more likely that increasing precision of public information reduces welfare. Our findings suggest caution in making information policies that aim to narrow informational gap with better public information.
Keywords: Information inequality, public information, disclosure, welfare, coordination
JEL Classification: D62, D83, E58, E61
Suggested Citation: Suggested Citation