Public disclosure and private information acquisition: A global game approach

This paper studies public information disclosure in a model of dynamic financial markets with endoge-nous information acquisition. Due to an information complementarity, multiple equilibria may emerge, complicating comparative statics analysis. By adding noise to agents' information costs, we establish equi-librium uniqueness using global-game techniques. We show that while public information always crowds out private information in all underlying equilibria, it can crowd in private information acquisition in the unique global-game equilibrium. This result is driven by the strategic uncertainty introduced through the global-game refinement. The crowding-in effect is more pronounced when there is a high level of funda-mental uncertainty, which supports the case for greater information disclosure during times of increased market volatility.(c) 2023 Elsevier Inc. All rights reserved.