The consequences of endogenizing information for the performance of a sequential decision procedure

Otto Swank () and Bauke Visser

Journal of Economic Behavior & Organization, 2008, vol. 65, issue 3-4, 667-681

Abstract: We analyse the implications of endogenizing information collection and reputational concerns for the performance of a sequential decision structure. In this model, two agents decide in a sequence whether to implement a public project. The cost of gathering information is private. We derive two results. First, endogenizing information replaces the herding problem with a free-rider problem. Second, endogenizing information aggravates the distortionary effect of reputational concerns.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:65:y:2008:i:3-4:p:667-681

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