Characterizing social value of informationTakashi Ui and Yasunori Yoshizawa Journal of Economic Theory, 2015, vol. 158, issue PB, 507-535 Abstract: This paper characterizes the social value of information in Bayesian games with symmetric quadratic payoff functions and normally distributed public and private signals. The main result provides a necessary and sufficient condition for welfare to increase with public or private information. In so doing, we represent welfare as a linear combination of the variance of a common term in an equilibrium strategy and that of an idiosyncratic term, which are referred to as the common variance and the idiosyncratic variance of actions, respectively. The ratio of their coefficients is a key parameter in our condition. If the coefficient of the common variance is relatively large, welfare necessarily increases, but if it is relatively small, welfare can decrease. Using our condition, we find eight types of games with different welfare effects of information. Keywords: Bayesian game; Incomplete information; Optimal information structure; Potential game; Private signal; Public signal; Team; Value of information (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:158:y:2015:i:pb:p:507-535 DOI: 10.1016/j.jet.2014.12.007 Access Statistics for this article Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell More articles in Journal of Economic Theory from Elsevier |
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