Abstract
Transparent disclosures of public information might be one natural policy to reduce information inequality among individuals. We conduct a welfare analysis of such policy by introducing ex-ante heterogeneity in individuals’ private information in a class of economies with dispersed information and strategic complementarity or substitutability. We find that better private information for already privately better-informed individuals increases welfare, even though it may be accompanied by greater information inequality. We also show that the better the private information for the already better-informed individuals, the more likely that increasing precision of public information reduces welfare. Our findings suggest caution in making information policies that aim to narrow informational gap with better public information.
| Original language | English |
|---|---|
| Pages (from-to) | 207-230 |
| Number of pages | 24 |
| Journal | Korean Economic Review |
| Volume | 38 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 2022 |
Bibliographical note
Funding Information:* The authors appreciate the very helpful suggestions from two anonymous referees. We also thank Jay Pil Choi and Bernhard Ganglmair for helpful comments at the MaCCI/EPoS Virtual IO Seminar. Kim acknowledges financial support for this work by the Yonsei University Future-Leading Research Initiative (2019-22-0187, 2020-22-0499). The authors declare that there are no competing interests to disclose for this work. ** Corresponding and First Author, Assistant Professor, School of Economics, Yonsei University, 50 Yonsei-ro, Seodaemun-gu, Seoul 03722, Republic of Korea, E-mail: jinyeub@yonsei.ac.kr *** Co-Author, Assistant Professor, School of Economics, Yonsei University, 50 Yonsei-ro, Seodaemungu, Seoul 03722, Republic of Korea, E-mail: myungkyushim@yonsei.ac.kr
Publisher Copyright:
© 2022, Korean Economic Association. All rights reserved.
All Science Journal Classification (ASJC) codes
- Economics, Econometrics and Finance(all)