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Majoritarian preference, utilitarian welfare and public information in Cournot oligopoly
journal contribution
posted on 2019-07-01, 00:00 authored by Jaideep Roy, Randolph Silvers, Ching-Jen SunChing-Jen SunCan individual preferences for public information among heterogeneous consumers be aggregated into a meaningful social preference that does not suffer from Condorcet cycles? In a Cournot model where homogeneous producers observe a public signal about an uncertain cost of production prior to taking quantity decisions, we show that the majoritarian preference of consumers for the precision of public information is fairly well behaved so that a Condorcet winner always exists. Under a monotonicity condition on the demand function, we characterize the Condorcet-winning precision in terms of the demand function and the number of firms under which the Condorcet-winning precision (i) hurts consumers' surplus and profits or (ii) remains conflict-free. These results have interesting implications on ‘collective’ Bayesian persuasion by agencies representing consumers, showing that when full transparency maximizes expected consumers' surplus, collective Bayesian persuasion can lead to full opacity, and vice versa.
History
Journal
Games and economic behaviorVolume
116Pagination
269 - 288Publisher
ElsevierLocation
Amsterdam, The NetherlandsPublisher DOI
ISSN
0899-8256eISSN
1090-2473Language
engPublication classification
C1 Refereed article in a scholarly journal; C Journal articleCopyright notice
2019, Elsevier Inc.Usage metrics
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