11 votes

What are examples for the phenomenon that more (or better) information makes everybody worse off?

The “to be announced” or TBA market for agency mortgage-backed securities is a great example of this. The short version is as follows: The TBA market is a market wherein one can purchase or sell for ...
dismalscience's user avatar
11 votes

What are examples for the phenomenon that more (or better) information makes everybody worse off?

This sounds glib, but The Internet is an ongoing example. In economic models where access to information is an explicit factor, we often gloss over the fact that mere exposure to information about ...
heh's user avatar
  • 1,808
8 votes

What are examples for the phenomenon that more (or better) information makes everybody worse off?

The post of @Mmmmmm about traffic reminded me of Braess's Paradoxon: There are situations in a traffic network (under the assumption that all drivers are rational) where removing some roads leads to a ...
flawr's user avatar
  • 189
6 votes

What are examples for the phenomenon that more (or better) information makes everybody worse off?

Paul Krugman recently discussed the Bloomberg terminal, a classic example of a resource with the following properties: Those who get it are at an advantage, so naturally everyone gets it; It's not ...
J.G.'s user avatar
  • 383
6 votes
Accepted

Why is it called Bayesian Persuasion?

In a standard cheap-talk setting, a sender (S) has better information on a state of the world and wants to communicate this information to a receiver (R) who then takes an action. However, S and R ...
Bayesian's user avatar
  • 5,280
6 votes
Accepted

Difficulty in understanding the notation related from probability theory with game theory

We have that ${\cal I} = ((X^i)_i, \mu)$​ and ${\cal J} = ((Y^i)_i, \nu)$​ are two information structures. An Interpretation mapping for player $i$​​ is a mapping $\phi^i: X^i \to \Delta(Y^i)$​ so it ...
tdm's user avatar
  • 11.2k
5 votes
Accepted

Why does optimal allocation call for unlimited distribution of information?

Suppose you have a product that you can distribute for constant marginal cost $c$. For every $v\geq0$ assume there are some consumers who value the good at $v$. The net welfare created when someone ...
Ubiquitous's user avatar
  • 16.9k
5 votes

Is a hyperlink a kind of informational public good?

In the Samuelson's definition of public good, the good must be non-excludable and non-rivalrous. Hyperlinks (if public and pointing to public pages) are non-excludable, and --to the condition of not ...
Adrien Pacifico's user avatar
5 votes

Definiton of information sets in rational expecations models

Two notes. A. "Conditioning on information" has always been applied in economics without much attention to probability theory-rigor, because it has (indeed) such a strong intuitive sense: &...
Alecos Papadopoulos's user avatar
5 votes
Accepted

Definition of Diffusion Centrality in Banerjee et al. (2019)

Let me use capital letter $W$ instead of small letter $w$ (as $W$ is actually a matrix). So, let $W$ be the matrix that contains in row $i$ and column $j$ the probability that $j$ hears from $i$. Then ...
tdm's user avatar
  • 11.2k
5 votes
Accepted

What is the intuition behind Blackwell's Equivalence Theorem on Information Structures?

To answer the first part of your question, we do not need any more assumptions for the comparison of experiments (besides some measurability issues). Before going on, I'll fix some notations to ones ...
djsteve's user avatar
  • 66
4 votes

VCG mechanism and budget balance

In your example, the playstation is a public good to be used by both roommates. Note that $\theta_1,\theta_2 < \theta_3$, but $\theta_1+\theta_2>\theta_3$, that is, one roommate alone would not ...
Bayesian's user avatar
  • 5,280
3 votes

What are examples for the phenomenon that more (or better) information makes everybody worse off?

This is a very old idea in general equilibrium models with imperfect information and incomplete markets. More information could be detrimental if the agents that face uncertainty situations decide to ...
KArrow'sBest's user avatar
3 votes

Robust asymmetric information?

It seems to me based on the 2019 JEL review of the same authors that they had published more-or-less what you ask about in a 2015 paper about monopolies and price discrimination (as an application of ...
Dolphin 613 Motorboat's user avatar
3 votes

Does there exist a mathematical formalization of Hayek's ideas about information and the price system?

Eric Maskin has a paper called “Friedrich von Hayek and Mechanism Design”, which tries to connect some of Hayek’s ideas to the (formal) theory of mechanism design. This paper, and the references ...
Theoretical Economist's user avatar
3 votes

Risk and Information

The classic paper on preferences over the timing of information revelation is Kreps and Porteus (1978). This seems to capture at least a little, if not most, of what you seem to be describing, so you ...
Theoretical Economist's user avatar
3 votes
Accepted

Higher order beliefs and coherency in game theory

The way hierarchies of beliefs are specified, beliefs on the same events are encoded in different places. The basic idea is actually quite simple. You have two players, Ann and Bob, say. Ann's first ...
Michael Greinecker's user avatar
3 votes
Accepted

Bayes’ rule in "The sources of capital misallocation"

It follows immediately from Bayesian Updating using Bayes Rule for normal random variables. You can find derivations in e.g. Baley/Veldkamp (2021): Bayesian Learning See also the related answer at ...
jpfeifer's user avatar
  • 529
2 votes
Accepted

Set of Bayes Correlated Equilibria when complete information is not available

You can certainly do it. However, keep in mind that the BCE will not be a lot "smaller". This is because there are many information structures that are almost perfectly informative, or that fully ...
Regio's user avatar
  • 4,188
2 votes
Accepted

Common knowledge in model formulation and solution

Two points. Common knowledge is defined by Aumann in terms of partitions, not $\sigma$-algebras. There is generally no natural correspondence between these. The grand state space is trivially common ...
Michael Greinecker's user avatar
2 votes

Definiton of information sets in rational expecations models

The "answer" to the original question in this thread is briefly given on page 2 of the following notes cited in this question, and more carefully explained in the appendix appearing at the ...
Leigh Tesfatsion's user avatar
2 votes
Accepted

Any good resources on Information Economics Theory?

For the basics I always liked Varian's "Microeconomic Analysis" (the graduate book). For a good introduction into game theory (with a nice chapter on signalling) I would first read Gibbons' &...
Evangelos Con's user avatar
2 votes

Information asymmetry references and it's relation to freemarkets - reference request?

The Economics of Asymmetric Information by Brian Hiller provides overview of main economic problems in relation to asymmetric information.
WilliamT's user avatar
  • 1,785
2 votes

Unwrapping Kamenica and Gentzkow model

It is optimal for the sender not to reveal any information at all. This follows from the result that the highest payoff the sender can achieve is given by the concavification of the value function ...
Michael Greinecker's user avatar
1 vote

SIR Model and Information/ Innovation Economics

I'm not familiar with this area, so I can't tell you what are the seminal works, etc., but a quick search finds Gurley & Johnson (2017) "Viral economics: an epidemiological model of knowledge ...
Dolphin 613 Motorboat's user avatar

Only top scored, non community-wiki answers of a minimum length are eligible