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Conformism and Public News, Celine Rochon, Gabriel Desgranges

Conformism and Public News, Celine Rochon, Gabriel Desgranges
We study a model where investment decisions are based on investors’ information about the unknown and endogenous return of the investment. The information of investors consists of endogenously determined messages sold by financial analysts who have access to both public and private information on the return of the investment. We assume that the return of the investment is correlated with the aggregate investment. This results into a beauty contest among analysts (or a "conformism" effect). In equilibrium, analysts sell all the information they have to all the investors. A striking result is that there are sometimes multiple equilibria. There are equilibria where the beauty contest is exacerbated. Because of the correlation across analysts' information sources, not all the information available in the economy is transmitted to investors
Bibliography note
Includes bibliographical references
international or intergovernmental publication
Literary Form
non fiction
Main title
Conformism and Public News
Nature of contents
Responsibility statement
Celine Rochon, Gabriel Desgranges
Series statement
IMF Working Papers
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. The Model; III. The Equilibrium; IV. Conclusion; Appendix; References; Footnotes
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