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Information Use and Social Welfare in a Duopoly with Anti-Coordination

Svedberg, Andrea LU (2018) NEKN01 20181
Department of Economics
Abstract (Swedish)
The aim of this thesis is to investigate information use, equilibrium behavior and social welfare in a duopoly market with anti-coordination. The analysis is conducted through the application of a game theoretic model first introduced in a 2002 seminal paper by Morris and Shin, to the Los Angeles stringer industry. In this setting, freelance journalists selling footage to news networks have a motive to match some fundamental state of the world which is the location of the biggest event occurring in a night and an anti-coordination motive in trying to achieve product differentiation. The firms play a static Bayesian game, taking actions based on noisy public and private information signals. In the unique, symmetric equilibrium, the firms... (More)
The aim of this thesis is to investigate information use, equilibrium behavior and social welfare in a duopoly market with anti-coordination. The analysis is conducted through the application of a game theoretic model first introduced in a 2002 seminal paper by Morris and Shin, to the Los Angeles stringer industry. In this setting, freelance journalists selling footage to news networks have a motive to match some fundamental state of the world which is the location of the biggest event occurring in a night and an anti-coordination motive in trying to achieve product differentiation. The firms play a static Bayesian game, taking actions based on noisy public and private information signals. In the unique, symmetric equilibrium, the firms choose an action where they assign greater weight to the private signal than is socially optimal. Social welfare analysis indicates that increased precision of public information always increases welfare while increased precision of private information always decreases welfare, as it induces firms to further overweigh their private information and, therefore, to obtain suboptimal footage. (Less)
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author
Svedberg, Andrea LU
supervisor
organization
course
NEKN01 20181
year
type
H1 - Master's Degree (One Year)
subject
keywords
Information, Social Welfare, Game Theory, Duopoly
language
English
id
8949703
date added to LUP
2018-07-03 14:21:25
date last changed
2018-07-03 14:21:25
@misc{8949703,
  abstract     = {The aim of this thesis is to investigate information use, equilibrium behavior and social welfare in a duopoly market with anti-coordination. The analysis is conducted through the application of a game theoretic model first introduced in a 2002 seminal paper by Morris and Shin, to the Los Angeles stringer industry. In this setting, freelance journalists selling footage to news networks have a motive to match some fundamental state of the world which is the location of the biggest event occurring in a night and an anti-coordination motive in trying to achieve product differentiation. The firms play a static Bayesian game, taking actions based on noisy public and private information signals. In the unique, symmetric equilibrium, the firms choose an action where they assign greater weight to the private signal than is socially optimal. Social welfare analysis indicates that increased precision of public information always increases welfare while increased precision of private information always decreases welfare, as it induces firms to further overweigh their private information and, therefore, to obtain suboptimal footage.},
  author       = {Svedberg, Andrea},
  keyword      = {Information,Social Welfare,Game Theory,Duopoly},
  language     = {eng},
  note         = {Student Paper},
  title        = {Information Use and Social Welfare in a Duopoly with Anti-Coordination},
  year         = {2018},
}