Public information and the concern for coordination

Kene Boun My (1) , Camille Cornand (2) , Rodolphe dos Santos Ferreira (1)

1 BETA - Bureau d'Économie Théorique et Appliquée
2 GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne

In Keynes' beauty contest, agents make evaluations reflecting both an expected fundamental value and the conventional value expected to be set by the market. They thus respond to fundamental and coordination motives, respectively, the prevalence of either being set exogenously. Our contribution is twofold. First, we propose a valuation game in which agents strategically choose how to weight each motive. This game emphasises public information leads agents to favour the coordination motive. Second, we test the game through a laboratory experiment. Subjects tend to conform to theoretical predictions, except when fundamental uncertainty is low relative to strategic uncertainty. Abstract In Keynes' beauty contest, agents make evaluations reflecting both an expected fun

Mots clés: beauty contest; experiment; coordination; dispersed information; public information

Domaines: Economies et finances

Kene Boun My, Camille Cornand, Rodolphe dos Santos Ferreira. Public information and the concern for coordination. 2017. ⟨hal-03468870v5⟩