Information Inequality and Role of Public Information

10 Pages Posted: 16 Apr 2020 Last revised: 29 Jul 2020

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 externalities. We find that, paradoxically, welfare unambiguously increases when information inequality widens through greater precision of private information for the already informationally-rich individuals. We also show that the greater the information inequality, the more likely that 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). 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)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
12
Abstract Views
183
PlumX Metrics