Bayesian Comparative Statics
- Creators
- Mekonnen, Teddy
- Leal Vizcaíno, René
Abstract
We study how information affects equilibria and welfare in games. For an agent, more precise information about an unknown state of the world leads to a mean-preserving spread of beliefs. We provide necessary and sufficient conditions to obtain either a non-increasing-mean or a non-decreasing-mean spread of actions whenever information precision increases for at least one agent. We apply our Bayesian comparative statics framework to study informational externalities in strategic environments. In persuasion games, we derive sufficient conditions that lead to extremal disclosure of information. In oligopolistic markets, we characterize the incentives of firms to share information. In macroeconomic models, we show that information not only drives the amplitude of business cycles but also affects aggregate output. Finally, in a novel application, we compare the demand for information in covert and overt information acquisition games.
Additional Information
This paper was previously circulated under the title, "Ex-ante Comparative Statics: Responsiveness to Information Quality." We are indebted to Asher Wolinsky, Eddie Dekel, Bruno Strulovici, and Jeff Ely for their unwavering guidance and encouragement. Our work has also greatly benefited from conversations with Laura Doval, Jay Lu, Alessandro Pavan, Rob Porter, Phil Reny, Marciano Siniscalchi, Jean Tirole, and Zenon Zabinski.Attached Files
Submitted - Paper_Vizcaino.pdf
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Additional details
- Eprint ID
- 96005
- Resolver ID
- CaltechAUTHORS:20190531-110425860
- Created
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2019-05-31Created from EPrint's datestamp field
- Updated
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2023-06-01Created from EPrint's last_modified field