Welfare Effects of Partial Publicity and Partial Transparency in Endogenous Information Acquisition

33 Pages Posted: 20 Jul 2022 Last revised: 10 Jan 2023

See all articles by Hiroki Arato

Hiroki Arato

Tokyo Metropolitan University

Tomoya Nakamura

Meiji Gakuin University

Date Written: July 7, 2022

Abstract

We analyze the welfare effects of two information disclosure policies using ``beauty contest" coordination games in which information acquisition about the state is endogenous. In particular, we compare a partial publicity policy with a partial transparency policy. We show that a partial publicity policy is more effective in improving social welfare than a partial transparency policy. We also show that the highest level of social welfare can be achieved using only a partial publicity policy, even when the two policies can be implemented simultaneously.

Keywords: Beauty contest, Coordination Games, Information acquisition, Overreaction, Central bank communication

JEL Classification: D62, D82, D83, E58

Suggested Citation

Arato, Hiroki and Nakamura, Tomoya, Welfare Effects of Partial Publicity and Partial Transparency in Endogenous Information Acquisition (July 7, 2022). Available at SSRN: https://ssrn.com/abstract=4155967 or http://dx.doi.org/10.2139/ssrn.4155967

Hiroki Arato (Contact Author)

Tokyo Metropolitan University

1-1 Minami Ohsawa, Hachioji-shi
Tokyo 192-0397
Japan

Tomoya Nakamura

Meiji Gakuin University ( email )

Shirokane-dai 1-2-37, Minato-ku
Tokyo, Tokyo, 108 108-8636
United States

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