Optimal Degree of Public Information Dissemination

By Camille Cornand, Frank Heinemann. Social Science Research Network, 2006

281 citations recorded by the source corpus.

In currency exchange markets, there is a conflict between individual decisions and the socially optimal solution. Whereas agents have a coordination motive to take the same position, at the social level effective market coordination per se is not socially valuable, and the central bank aims at driving agents’ actions as close as possible to the economic fundamental state. Some studies argue that it might be better to withhold public information because its potential to serve as a focal point induces agents to exaggerate the importance of public announcements. This paper shows that public information should always be provided with maximum precision, but under certain condition not to all agents. Restrictions on the degree of publicity are a better instrument with which to prevent the negative welfare effects of public announcements than restrictions on their precision are. The optimal degree of publicity is always positive.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/6dd0ffd11fa6b8720d8ab2befbbd5a2ac8a288fb

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

Citations in the corpus

Information Acquisition and Welfare (2014, background): “Using (18) and (22), we have that the precision of private information acquired in equilibrium is inefficiently low if and only if”
The Economic Value of Market Information for Farmers in Developing Economies (2015, background): “Cornand and Heinemann (2008) show that this adverse consequence may be avoided if the information can be selectively distributed amongst a subset of players.”
Optimal Economic Transparency (2012, methodology): “Rather than comparing the case of no announcement with the case in which all firms have information on the output-gap target, I consider the partial release of information along the lines of Cornand and Heinemann (2004).”
Public Information and Coordination: Evidence from a Credit Registry Expansion (2011, unknown): “…in recent theory papers (Morris and Shin (2002), (2005), (2007); Angeletos and Pavan (2004), (2007); Morris, Shin, and Tong (2006); Svensson (2006); Cornand and Heinemann (2008)). status of the borrower (i.e., missed a principal payment, interest payments more than 180 days in arrears, bankruptcy…”
Knowing What Others Know: Coordination Motives in Information Acquisition (2007, unknown): “In stage 2, agents observe their chosen signals and pick an optimal (2)Other variants of the beauty contest game have been used by Allen, Morris, and Shin (2006) to study asset pricing, by Froot, Scharfstein, and Stein (1992) to study the incentives of financial analysts, and by Angeletos and Pavan ”
Policy with Dispersed Information (2007, unknown): “directly from (14) noting that the last three terms in ( 14 ) do not affect individual decisions.”