Speak or wait: Strategic delay and the value of public information

When is the value of public information positive in a game?

In environments with expected utility, it has long been established that speculative trade cannot occur and that the value of public information is negative in economies with risk‐sharing and no aggregate uncertainty. We show that these results are still true even if we relax expected utility, so that either Dynamic Consistency (DC) or Consequentialism is violated. We characterize no speculative trade in terms of a weakening of DC and find that Consequentialism is not required. Moreover, we show that a weakening of both DC and Consequentialism is sufficient for the value of public information to be negative. We therefore generalize these important results for convex preferences which contain several classes of ambiguity averse preferences.

Both consumers and a monopolist producer are uncertain about a good's quality. I derive conditions under which the value of public information about quality will be positive or negative to consumers and the firm. I find that the firm always prefers more information, but consumers may not. I identify two properties of cost functions which lead to a negative value of information for consumers: increasing returns to scale and sufficiently convex marginal costs. If, however, demand and cost functions are linear, then consumers always prefer more information. I also analyze the aggregate value of information and extensions to nonmonopolistic markets.

Consider a symmetric common-value Tullock contest with incomplete information in which the players' cost of effort is the product of a random variable and a deterministic real function of effort, d. We show that the Arrow&-Pratt curvature of d, Rd,Rd, determines\n\t\t\t\t the effect on equilibrium efforts and payoffs of the increased \n\t\t\t\t flexibility/reduced commitment that more information introduces into the\n\t\t\t\t contest: If RdRd is increasing, then effort decreases (increases) with \n\t\t\t\t the level of information when the cost of effort (value) is independent \n\t\t\t\t of the state of nature. Moreover, if RdRd is increasing (decreasing), \n\t\t\t\t then the value of public information is nonnegative (nonpositive).

In environments with expected utility, it has long been established that speculative trade cannot occur (Milgrom and Stokey), and that the value of public information is negative in economies with risk-sharing and no aggregate uncertainty (Hirshleifer, Schlee). We show that these results are still true even if we relax expected utility, so that either Dynamic Consistency (DC) or Consequentialism is violated. We characterise no speculative trade in terms of a weakening of DC and find that Consequentialism is not required. Moreover, we show that a weakening of both DC and Consequentialism is sufficient for the value of public information to be negative. We therefore generalise these important results for convex preferences which contain several classes of ambiguity averse preferences.

Using the notion of subjective beliefs from Rigotti et al. (2008), we provide, for a wide variety of dynamic models with ambiguity aversion, a connection between Dynamic Consistency, prior by prior Bayesian updating of beliefs revealed by trading behavior and positive value of information. We apply these characterizations in a multi agent setting. First, we show that a weakening of DC, consistent with Ellsberg type behavior, precludes speculative trade, generalizing the result of Milgrom and Stokey (1982). Second, we show that, in a risk sharing environment with no aggregate risk, if the value of information is positive for all agents, then the value of public information is negative, generalizing the result of Schlee (2001). JEL-Classication s: D81, D83, D91

The paper shows that in the standard model of monopoly with asymmetric information and second-degree price discrimination, the monopolist prefers to reveal public information under a form of stochastic dependence that is weaker than the affiliation of private values, private signals, and public signals.

The value of public information in majority decisions

The study reflects some aspects related to the issue of access to information and its effects on citizens. The inability to identify public information sources and resources, as well as the superficial presentation of public information content make it difficult for the information-consuming public to satisfy their information needs, hinder the possibilities of taking action, benefiting from services and making vital decisions in everyday life. The culture of access to information in the Republic of Moldova stems from the mass culture of contemporary society in which citizens are preoccupied with their individual worries, poverty, lack of opportunities and lack of desire to get involved in societal processes. Thus, more often than not, they show indifference or ignorance, unwillingness, sometimes even distrust towards state institutions and the mass media. Information, however, is a dimension of existence and an important resource for thought, attitude, manifestation, persuasion and involvement of contemporary man. The value of public information can increase thanks to the organization of an efficient information activity through which the transmitted message will reach the public in an operative and qualitative (undistorted) way. The involvement of the media institution in this process makes the organization of information and communication activities more efficient, raises the quality of the use of public information resources, facilitates and expands access to information of public interest. According to their competences, public authorities, libraries and the media are the institutions that can effectively contribute to ensuring access to information and facilitate the Republic of Moldova's steps towards European integration.

This study investigates whether major USDA reports still provide important news to changing crop markets. The news component of each report, or market “surprise,” is measured as a difference between the USDA estimate and its private expectation in corn, soybeans, and wheat markets. Changes in the relevance of USDA information are assessed by examining changes in the magnitude of market surprises and shifts in the futures price reaction to these surprises, which isolates the impact of each report. The stable size of market surprises over time suggests that competition from alternative data sources has not reduced the news component of USDA crop reports. Increasing price reaction to most reports, including those facing competition from alternative information sources, suggests that value of public information may be enhanced in uncertain markets affected by structural changes.

Value of public information in sender–receiver games

The value of public information in commodity futures markets

The value of public information: Media coverage of incumbent firms and entrepreneurial activities

I study how the quality of information affects politician selection in a two-candidate model where voters want to vote for the best candidate but also for the winner. Voters receive private and public signals about candidates’ relative valence. Public information has a stronger effect on equilibrium outcomes because voters use it to infer other voters’ beliefs. Contrary to what might be expected, more precise public information does not always benefit the better candidate’s electoral prospects: when voters’ private information is precise enough, improving public information hurts the better candidate’s electoral prospects. The model provides a rationale for the prevalence of large swings in voter sentiment in close elections, and for front-runner candidates’ tendency to avoid face-to-face television debates with the underdog.

ABSTRACTFirms' inflexibility in adjusting output prices to economic shocks exacerbates information asymmetry with respect to firms' profits, but public information on firms' cost structure mitigates this problem. We construct a novel form of public information from economic statistics disclosed by the government and find that such public information significantly reduces inflexible‐price firms' bid–ask spreads, the probability of informed trading, and analyst forecast dispersions, but these results do not hold for flexible‐price firms. Security analysts seek more cost‐related information during conference calls about inflexible‐price firms, but such a phenomenon is observed less frequently if a firm's input cost is more publicly observable. In addition, stock markets react more strongly to earning news announced by inflexible‐price firms, consistent with our intuition.