The Resource Efficiency and welfare with complementaries & asymmetric information, George-Marios Angeletos [and] Alessandro Pavan., (electronic resource)

Efficiency and welfare with complementaries & asymmetric information, George-Marios Angeletos [and] Alessandro Pavan., (electronic resource)

Label
Efficiency and welfare with complementaries & asymmetric information
Title
Efficiency and welfare with complementaries & asymmetric information
Statement of responsibility
George-Marios Angeletos [and] Alessandro Pavan.
Creator
Contributor
Provider
Subject
Language
eng
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. Keywords: Social value of information, coordination, externalities, transparency. JEL Classifications: C72, D62, D82
Member of
Additional physical form
Abstract in HTML and working paper for download in PDF available via World Wide Web at the Social Science Research Network.
Cataloging source
MYG
http://library.link/vocab/creatorName
Angeletos, Marios
Index
no index present
Literary form
non fiction
Nature of contents
  • bibliography
  • technical reports
http://library.link/vocab/relatedWorkOrContributorName
  • Pavan, Alessandro
  • Massachusetts Institute of Technology
  • Internet Archive
Series statement
Working paper series / Massachusetts Institute of Technology, Dept. of Economics
Series volume
working paper 05-29
http://library.link/vocab/subjectName
Information theory in economics
Label
Efficiency and welfare with complementaries & asymmetric information, George-Marios Angeletos [and] Alessandro Pavan., (electronic resource)
Instantiates
Publication
Note
"October 31, 2005"--Cover
Bibliography note
Includes bibliographical references (p. 28-30)
Dimensions
28 cm.
Extent
30 p.
Specific material designation
remote
System control number
  • (OCoLC)64276567
  • (CaSfIA)efficiencywelfar00ange
  • (CaSfIA)001360446
Label
Efficiency and welfare with complementaries & asymmetric information, George-Marios Angeletos [and] Alessandro Pavan., (electronic resource)
Publication
Note
"October 31, 2005"--Cover
Bibliography note
Includes bibliographical references (p. 28-30)
Dimensions
28 cm.
Extent
30 p.
Specific material designation
remote
System control number
  • (OCoLC)64276567
  • (CaSfIA)efficiencywelfar00ange
  • (CaSfIA)001360446

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