Arbeitspapier
Informational cascades elicit private information
We introduce cheap talk in a dynamic investment model with information externalities. We first show how social learning adversely affects the credibility of cheap talk messages. Next, we show how an informational cascade makes thruthtelling incentive compatible. A separating equilibrium only exists for high surplus projects. Both an investment subsidy and an investment tax can increase welfare. The more precise the sender’s information, the higher her incentives to truthfully reveal her private information.
- Language
-
Englisch
- Bibliographic citation
-
Series: WZB Discussion Paper ; No. SP II 2004-19
- Classification
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Wirtschaft
Externalities
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- Subject
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Cheap Talk
Information Externality
Informational Cascades
Social Learning
Herd Behaviour
- Event
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Geistige Schöpfung
- (who)
-
Gossner, Olivier
Melissas, Nicolas
- Event
-
Veröffentlichung
- (who)
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Wissenschaftszentrum Berlin für Sozialforschung (WZB)
- (where)
-
Berlin
- (when)
-
2004
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Gossner, Olivier
- Melissas, Nicolas
- Wissenschaftszentrum Berlin für Sozialforschung (WZB)
Time of origin
- 2004
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