Majoritarian preference, utilitarian welfare and public information in Cournot oligopoly

B-Tier
Journal: Games and Economic Behavior
Year: 2019
Volume: 116
Issue: C
Pages: 269-288

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Can 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.

Technical Details

RePEc Handle
repec:eee:gamebe:v:116:y:2019:i:c:p:269-288
Journal Field
Theory
Author Count
3
Added to Database
2026-01-29