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Endogenous Information Acquisition and Partial Announcement Policy
Get PDFJanuary 2014. Revised April 2014We consider implementability and the welfare effects of a partial announcement policy using a model of a beauty contest where agents’ actions are strategic complements and where their decisions on public information acquisition are endogenous. The following results are obtained: i) if the authorities sell public information at a constant price, multiple equilibria emerge and a partial announcement equilibrium is unstable; ii) here exist pricing rules that ensure the uniqueness and stability of mixed strategy equilibria, which indicates that a partial announcement policy can be implemented; iii) the optimal price of public information rises as its precision increases relative to private information; iv) the optimal price is independent of the degree of strategic complementarity
Old-age Social Security vs. Forward Intergenerational Public Goods Provision
Get PDF* Revised： [11-26, 2011]* Revised： [11-26-Rev., 2013]This paper introduces an overlapping-generations model with earnings hetero-geneity and borrowing constraints. The labor income tax and the allocation of tax revenue between social security and forward intergenerational public goods are determined in a bidimensional majoritarian voting game played by successive gen-erations. The political equilibrium is characterized by an ends-against-the-middle equilibrium where low- and high-income individuals form a coalition in favor of a lower tax rate and less social security while middle-income individuals favor a higher tax rate and greater social security. Government spending then shifts from social security to public goods provision if higher wage inequality is associated with the borrowing constraint and a high elasticity of marginal utility of youthful consump-tion
