Information acquisition and learning from prices over the business cycle

Arbeitspapier

We study firms' incentives to acquire costly information in booms and recessions to understand the role of endogenous information in explaining asymmetric business cycles. When the economy has been in a boom in the previous period, and firms enter the current period with an optimistic belief, the incentive to acquire information is weaker than when the economy has been in a recession and firms share a pessimistic belief. However, the price system, in transmitting information from informed to uninformed firms, moderates asymmetric incentives in information acquisition and renders the aggregate learning outcome approximately acyclical. Our results challenge the prevailing view of procyclical learning as the source of asymmetric business cycles.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SSE/EFI Working Paper Series in Economics and Finance ; No. 740

Classification and Topics

• Classification: Wirtschaft ; Exchange and Production Economies ; Asymmetric and Private Information; Mechanism Design ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Expectations; Speculations ; Prices, Business Fluctuations, and Cycles: Other
• Subject: information choice ; rational expectations ; asymmetric information ; Bayesian learning ; strategic substitutability ; business cycle asymmetries ; Informationsbeschaffung ; Lernprozess ; Gleichgewicht ; Rationale Erwartung ; Asymmetrische Information ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Mäkinen, Taneli ; Ohl, Björn
• Event: Veröffentlichung
• (who): Stockholm School of Economics, The Economic Research Institute (EFI)
• (where): Stockholm
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/56368
• Last update: 10.03.2025, 11:42 AM CET