Frederik Lundtofte () and Patrick Leoni
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Frederik Lundtofte: Department of Economics and Knut Wicksell Centre for Financial Studies, Lund University
Patrick Leoni: Kedge Business School, Postal: Kedge Business School, Domaine de Luminy BP 921, 13 288 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 agent: "conforming" and "dissenting." 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 informative and uninformative equilibria and demonstrate that the uninformative equilibria can dominate the informative ones in terms of ex-post social welfare.
Keywords: Social welfare; information; forecasting; asset pricing; heterogeneous beliefs
45 pages, September 13, 2013
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kwc-wp-2013-15.pdf
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