Frederik Lundtofte () and Patrick Leoni ()
Frederik Lundtofte: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Patrick Leoni: EUROMED Management, Postal: Domaine de Luminy - BP 921, F-13288 Marseille Cedex 9, France
Abstract: We analyze how a benevolent, privately-informed government agency would optimally release information about the economy's growth rate when the agents hold heterogeneous beliefs. We model two types of agents: "trusting" and "distrustful." The former has a prior that is identical to that of the government agency, whereas the latter has a prior that differs from that of the government agency. We identify both "revealing" and "nonrevealing" equilibria and demonstrate that the "nonrevealing" equilibria can dominate the "revealing" equilibria in terms of ex-post social welfare.
39 pages, First version: July 31, 2010. Revised: May 30, 2012.
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