Essays on Strategic Information Acquisition

This thesis studies information acquisition in settings where agents can strategically acquire, at cost or freely, some informative signals about the underlying state of the world prior to make a decision. Chapter 2 studies how agents select information sources in a model with potentially delusional agents. Agents with anticipatory utility must decide whether to undertake a common project. Ex-ante, they can select which information sources to pay attention to. When choosing the information sources, agents take into account the fact that they may ex-post have to engage in costly denial. We show that multiple equilibria coexist: one in which agents are fully informed and one where agents pay attention only to the information source most likely to reveal favourable information. Chapter 3 studies endogenous information acquisition in an investment trading game à la Angeletos, Lorenzoni, and Pavan (2010). In such a game if agents have dispersed information, endogenous strategic complementarity in actions emerges owing to the information spillover between real sector and financial sector and generates inefficiency in the economy. By introducing endogenous information acquisition, this chapter aims at studying what information is acquired and how it affects the equilibrium outcome. It is shown that there exists complementarity in entrepreneurs’ information acquisition. It also investigates the conditions under which information is not acquired at all. Chapter 4 studies information acquisition in a network-formation game. It investigates how the desire to coordinate with some people and anti-coordinate with some others determines the information acquired and shapes the network formed in equilibrium. In an economy populated by N agents divided into two groups, in the first period agents can acquire informative signals about the state of the world by forming costly connections with other players. In the second period each agent chooses an action balancing the desire to be close to the fundamental, be close to the average action of players in his own group and be far from the average action of players in the opposite group.