Information Inequality and Role of Public Information

The Korean Economic Review, Accepted

25 Pages Posted: 16 Apr 2020 Last revised: 5 Nov 2021

See all articles by Jin Yeub Kim

Jin Yeub Kim

Yonsei University - School of Economics

Myungkyu Shim

Yonsei University - School of Economics

Date Written: May 11, 2020

Abstract

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

Kim, Jin Yeub and Shim, Myungkyu, Information Inequality and Role of Public Information (May 11, 2020). The Korean Economic Review, Accepted, Available at SSRN: https://ssrn.com/abstract=3566812 or http://dx.doi.org/10.2139/ssrn.3566812

Jin Yeub Kim (Contact Author)

Yonsei University - School of Economics ( email )

Seoul
Korea, Republic of (South Korea)

Myungkyu Shim

Yonsei University - School of Economics ( email )

Seoul
Korea, Republic of (South Korea)

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