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Information Aggregation in Markets, Elections and the Media

Paper Session

Friday, Jan. 4, 2019 10:15 AM - 12:15 PM

Atlanta Marriott Marquis, L507
Hosted By: Econometric Society
  • Chair: Timothy Feddersen, Northwestern University

Market Selection and the Information Content of Prices

Alp Atakan
,
Koc University
Mehmet Ekmekci
,
Boston College

Abstract

We study price formation in a large, common-value auction where the value of the objects for sale depends on an unknown state of the world. Buyers choose, based on their private information, between bidding in the auction and an outside option, and therefore the dis- tribution of bidders participating in the auction is determined endogenously in equilibrium. We first focus on an exogenous outside option that delivers a state-contingent payoff that is positive in at least one state. If the outside option’s expected value is nonnegative, then information is not aggregated in the auction in any equilibrium. We then turn to a model where bidders choose to participate in one of two concurrently operating auction markets. The outside option for one auction is the equilibrium value of participating in the alternative auction, i.e., outside options are endogenously determined. If frictions lead to uncertain gains from trade in the first auction, then information is not aggregated in either market even if the second auction is frictionless. This is because the two auction markets serve as state-contingent outside options for each other. Our findings are driven by how bidders self- select across options: A large disparity in the state-contingent payoffs in the two auctions implies that optimistic bidders select the option with a higher variance of state-contingent payoffs while pessimistic bidders select the option with a lower variance. Our results suggest a novel mechanism through which market imperfections in one market can have widespread effects across all linked markets.

Information Aggregation in Competitive Markets

Maximilian Mihm
,
New York University Abu Dhabi
Lucas Siga
,
New York University Abu Dhabi

Abstract

We study when equilibrium prices can aggregate information in a market with a large population of privately informed buyers and sellers. Our main result identifies a property of information—the betweenness property—that is both necessary and sufficient for aggregation. The characterization provides predictions about equilibrium prices in complex, multidimensional environments.

Robust Voter Persuasion

Carl Heese
,
University of Bonn and BGSE
Stephan Lauermann
,
Bonn University

Abstract

This paper studies persuasion of large electorates in a general environment with heterogeneous, private preferences. Persuasion is possible in a simple equilibrium under a weak condition on voter preferences. Persuasion is even possible just by releasing additional information when voters already have private signals and a version of the Condorcet Jury Theorem would otherwise hold in a large election. Persuasion does not require detailed knowledge of the distribution of voters' preferences and one signal structure can be used uniformly across environments.

Media Competition and Social Disagreement

Jacopo Perego
,
Columbia University
Sevgi Yuksel
,
University of California-Santa Barbara

Abstract

Abstract: We study the competitive provision and endogenous acquisition of political information. Our main result identifies a natural equilibrium channel through which a more competitive market for information increases social disagreement. A critical insight we put forward is that competition among information providers leads to a particular kind of informational specialization: firms provide relatively less information on issues that are of common interest, and relatively more information on issues along which agents' preferences are more heterogeneous. This enables agents to find information providers that are better aligned with their preferences. While agents become individually better informed, the social value of the information provided in equilibirum decreases, thereby decreasing the probability that the society implements socially optimal policies.

Discussant(s)
Songzi Du
,
Simon Fraser University
Ricardo Serrano-Padial
,
Drexel University
Arjada Bardhi
,
Duke University
Alexander Frankel
,
University of Chicago
JEL Classifications
  • C7 - Game Theory and Bargaining Theory
  • D7 - Analysis of Collective Decision-Making