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Coordination with flexible information acquisition

Yang, M; (2015) Coordination with flexible information acquisition. Journal of Economic Theory , 158 (Part B) pp. 721-738. 10.1016/j.jet.2014.11.017. Green open access

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Abstract

We study flexible information acquisition in a coordination game. “Flexible” acquisition means that players choose not only how much but also what kind of information to acquire. Information acquisition has a cost proportional to reduction of entropy. Hence, players will collect the information most relevant to their welfare but can be rationally inattentive to other aspects of the fundamental. When information is cheap, this flexibility enables players to acquire information that makes efficient coordination possible, which also leads to multiple equilibria. This result contrasts with the global game literature, where information structure is less flexible and cheap information leads to a unique equilibrium with inefficient coordination.

Type: Article
Title: Coordination with flexible information acquisition
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.jet.2014.11.017
Publisher version: https://doi.org/10.1016/j.jet.2014.11.017
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management
URI: https://discovery.ucl.ac.uk/id/eprint/10104738
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