Essays on the Economics of Information

Abstract

Information plays a central role in economic activities. How do people acquire information, individually or collectively, and what are the implications for markets? In this dissertation, I formalize these questions and provide theoretical answers. Chapter 1 considers the problem of optimal dynamic information acquisition from many correlated information sources. Conditions are given such that the myopic information acquisition rule is optimal. Chapter 2 extends the analysis to situations with overabundant information, where observation of all information sources is not necessary in order to learn the unknowns. Depending on the correlation structure across sources, sequential information acquisition by self-interested agents may lead to efficient information aggregation or learning traps. Chapter 3 investigates the effect of information arrival on durable-goods pricing. When the seller is uncertain about how buyers learn about their values over time, a constant price path delivers the greatest profit guarantee.