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Book/Printed Material Efficiency and welfare with complementarities and asymmetric information

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Title

  • Efficiency and welfare with complementarities and asymmetric information

Summary

  • "This paper examines equilibrium and welfare in a tractable class of economies with externalities, strategic complementarity or substitutability, and incomplete information. In equilibrium, complementarity amplifies aggregate volatility by increasing the sensitivity of actions to public information; substitutability raises cross-sectional dispersion by increasing the sensitivity to private information. To address whether these effects are undesirable from a welfare perspective, we characterize the socially optimal degree of coordination and the efficient use of information. We show how efficient allocations depend on the primitives of the environment, how they compare to equilibrium, and how they can be understood in terms of a social trade-off between volatility and dispersion. We next examine the social value of information in equilibrium. When the equilibrium is efficient, welfare necessarily increases with the accuracy of information; and it increases [decreases] with the extent to which information is common if and only if agents' actions are strategic complements [substitutes]. When the equilibrium is inefficient, additional effects emerge as information affects the gap between equilibrium and efficient allocations. We conclude with a few applications, including production externalities, Keynesian frictions, inefficient fluctuations, and efficient market competition"--National Bureau of Economic Research web site.

Names

  • Angeletos, Marios
  • Pavan, Alessandro
  • National Bureau of Economic Research

Created / Published

  • Cambridge, MA : National Bureau of Economic Research, c2005.

Headings

  • -  Information theory in economics

Notes

  • -  Title from PDF file as viewed on 12/19/2005.
  • -  Includes bibliographical references.
  • -  Also available in print.
  • -  Mode of access: World Wide Web.
  • -  System requirements: Adobe Acrobat Reader.

Call Number/Physical Location

  • HB1

Digital Id

Library of Congress Control Number

  • 2005705268

Access Advisory

  • Unrestricted online access

Online Format

  • image
  • pdf

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Citations are generated automatically from bibliographic data as a convenience, and may not be complete or accurate.

Chicago citation style:

Angeletos, Marios, Alessandro Pavan, and National Bureau Of Economic Research. Efficiency and Welfare With Complementarities and Asymmetric Information. Cambridge, MA: National Bureau of Economic Research, 2005. Pdf. https://aj.sunback.homes/item/2005705268/.

APA citation style:

Angeletos, M., Pavan, A. & National Bureau Of Economic Research. (2005) Efficiency and Welfare With Complementarities and Asymmetric Information. Cambridge, MA: National Bureau of Economic Research. [Pdf] Retrieved from the Library of Congress, https://aj.sunback.homes/item/2005705268/.

MLA citation style:

Angeletos, Marios, Alessandro Pavan, and National Bureau Of Economic Research. Efficiency and Welfare With Complementarities and Asymmetric Information. Cambridge, MA: National Bureau of Economic Research, 2005. Pdf. Retrieved from the Library of Congress, <aj.sunback.homes/item/2005705268/>.