Diverse Precision of Private Signals, Endogenous Public Signals and Transparency Policy

2007 ◽  
Author(s):  
Ming-Chun Hung ◽  
David S. Shyu
Keyword(s):  
Private Signals ◽  
Public Signals

scholarly journals Persuading Voters: It's Easy to Whisper, It's Hard to Speak Loud

2020 ◽  
Vol 34 (02) ◽  
pp. 1870-1877
Author(s):  
Matteo Castiglioni ◽  
Andrea Celli ◽  
Nicola Gatti
Keyword(s):  
Utility Function ◽  
Natural Question ◽  
Voting Rules ◽  
Expected Return ◽  
Fixed Parameter Tractable ◽  
The Public ◽  
Voting Rule ◽  
Private Signals ◽  
Fixed Parameter ◽  
Public Signals

We focus on the following natural question: is it possible to influence the outcome of a voting process through the strategic provision of information to voters who update their beliefs rationally? We investigate whether it is computationally tractable to design a signaling scheme maximizing the probability with which the sender's preferred candidate is elected. We resort to the model recently introduced by Arieli and Babichenko (2019) (i.e., without inter-agent externalities), and focus on, as illustrative examples, k-voting rules and plurality voting. There is a sharp contrast between the case in which private signals are allowed and the more restrictive setting in which only public signals are allowed. In the former, we show that an optimal signaling scheme can be computed efficiently both under a k-voting rule and plurality voting. In establishing these results, we provide two contributions applicable to general settings beyond voting. Specifically, we extend a well-known result by Dughmi and Xu (2017) to more general settings and prove that, when the sender's utility function is anonymous, computing an optimal signaling scheme is fixed-parameter tractable in the number of receivers' actions. In the public signaling case, we show that the sender's optimal expected return cannot be approximated to within any factor under a k-voting rule. This negative result easily extends to plurality voting and problems where utility functions are anonymous.

scholarly journals Group payoffs as public signals

2015 ◽  
Vol 48 ◽  
pp. 89-105 ◽  
Author(s):  
Christos A. Ioannou ◽  
Shi Qi ◽  
Aldo Rustichini
Keyword(s):  
Public Signals

Rules versus Discretion in Bank Resolution

2020 ◽  
Vol 33 (12) ◽  
pp. 5594-5629 ◽  
Author(s):  
Ansgar Walther ◽  
Lucy White
Keyword(s):  
Private Information ◽  
Optimal Policy ◽  
Financial Crises ◽  
Public Information ◽  
Time Inconsistency ◽  
Bank Resolution ◽  
Public Signals ◽  
Rules Versus Discretion

Abstract Recent reforms have given regulators broad powers to “bail-in” bank creditors during financial crises. We analyze efficient bail-ins and their implementation. To preserve liquidity, regulators must avoid signaling negative private information to creditors. Therefore, optimal bail-ins in bad times only depend on public information. As a result, the optimal policy cannot be implemented if regulators have wide discretion, due to an informational time-inconsistency problem. Rules mandating tough bail-ins after bad public signals, or contingent convertible (co-co) bonds, improve welfare. We further show that bail-in and bailout policies are complementary: if bailouts are possible, then discretionary bail-ins are more effective.

scholarly journals Information Design

2019 ◽  
Vol 11 (4) ◽  
pp. 151-185 ◽  
Author(s):  
Ina Taneva
Keyword(s):  
Information Structure ◽  
Information Design ◽  
Signal Distribution ◽  
Private Signals ◽  
Optimal Information

A designer commits to a signal distribution that is informative about a payoff-relevant state. Conditional upon the privately observed signals, agents take actions that affect their payoffs as well as those of the designer. We show how to derive the (designer) optimal information structure in static finite environments. We fully characterize it in a symmetric binary setting for a parameterized game. In this environment, conditionally independent private signals are never strictly optimal. (JEL C72, D78, D82, D83)

Endogenous Monitoring in a Partnership Game

2020 ◽  
Vol 110 (3) ◽  
pp. 776-796
Author(s):  
Anna Sanktjohanser
Keyword(s):  
United States ◽  
The United States ◽  
Repeated Game ◽  
Discount Factor ◽  
Imperfect Monitoring ◽  
Monitoring Cost ◽  
Private Signals ◽  
Public Message

I consider a repeated game in which, due to imperfect monitoring, no collusion can be sustained. I add a self-interested monitor who commits to obtain private signals of firms’ actions and sends a public message. The monitor makes an offer specifying the precision of the signals obtained and the amount to be paid in return. First, with a low monitoring cost, collusive equilibria exist. Second, collusive equilibria are monitor-preferred. Third, in monitor-preferred equilibria, firms’ payoffs are decreasing in the discount factor. My model helps explain cartel agreements between self-interested parties and firms in legal industries in the United States and Europe. (JEL C73, D43, D82, L12)

scholarly journals Learning from prices: information aggregation and accumulation in an asset market

2020 ◽  
Author(s):  
Michele Berardi
Keyword(s):  
Private Information ◽  
Dynamic Properties ◽  
Public Information ◽  
Information Aggregation ◽  
Time Varying ◽  
Private Signals ◽  
Private And Public ◽  
Fundamental Value ◽  
Over Time

Abstract Can prices convey information about the fundamental value of an asset? This paper considers this problem in relation to the dynamic properties of the fundamental (whether it is constant or time-varying) and the structure of information available to agents. Risk-averse traders receive two potential signals each period: one exogenous and private and the other, prices, endogenous and public. Prices aggregate private information but include aggregate noise. Information can accumulate over time both through endogenous and exogenous signals. With a constant fundamental, the precision of both private and public cumulative information increases over time but agents put progressively more weight on the endogenous signals, asymptotically disregarding private ones. If the fundamental is time-varying, the use of past private signals complicates the role of prices as a source of information, since it introduces endogenous serial correlation in the price signal and cross-correlation between it and innovations in the fundamental. A modified version of the Kalman filter can still be used to extract information from prices and results show that the precision of the endogenous signals converges to a constant, with both private and public information used at all times.

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