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American Economic Journal: Economic Policy: Vol. 6 No. 1 (February 2014)

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Paging Inspector Sands: The Costs of Public Information

Article Citation

Kapoor, Sacha, and Arvind Magesan. 2014. "Paging Inspector Sands: The Costs of Public Information." American Economic Journal: Economic Policy, 6(1): 92-113.

DOI: 10.1257/pol.6.1.92

Abstract

We exploit the introduction of pedestrian countdown signals—timers that indicate when traffic lights will change—to evaluate a policy that improves the information of all market participants. We find that although countdown signals reduce the number of pedestrians struck by automobiles, they increase the number of collisions between automobiles. They also cause more collisions overall, implying that welfare gains can be attained by hiding the information from drivers. Whereas most empirical studies on the role of information in markets suggest that asymmetric information reduces welfare, we conclude that asymmetric information can, in fact, improve it.

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Online Appendix (134.00 KB) | Download Data Set (1.97 MB) | Author Disclosure Statement(s) (398.85 KB)

Authors

Kapoor, Sacha (Erasmus U Rotterdam)
Magesan, Arvind (U Calgary)

JEL Classifications

D82: Asymmetric and Private Information; Mechanism Design
D83: Search; Learning; Information and Knowledge; Communication; Belief
R41: Transportation: Demand, Supply, and Congestion; Safety and Accidents; Transportation Noise

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