{
  "title": "Conformism and Public News",
  "publication": "IMF Working Papers, February 1, 2011",
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  "summary": "We study a model where investment decisions are based on investors’ information about the unknown and endogenous return of the investment.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- The paper studies a model where investment decisions are based on investors’ information about the unknown and endogenous return of the investment.\n- Investors’ information consists of endogenously determined messages sold by financial analysts who have access to both public and private information on the return of the investment.\n- The return of the investment is correlated with the aggregate investment, producing a beauty contest among analysts (a \"conformism\" effect).\n- In equilibrium, analysts sell all the information they have to all the investors.\n- There are sometimes multiple equilibria, including equilibria where the beauty contest is exacerbated.\n- Because of correlation across analysts' information sources, not all the information available in the economy is transmitted to investors."
    },
    {
      "heading": "Model and mechanism",
      "content": "- Investment return is endogenous and unknown; analysts possess both public and private signals about that return.\n- Correlation between the investment return and aggregate investment creates strategic incentives for analysts to coordinate on messages, generating a beauty-contest (conformism) dynamic.\n- Analysts choose messages endogenously and sell those messages to investors; message provision and sales determine the information investors use for investment decisions."
    },
    {
      "heading": "Main results and findings",
      "content": "- Equilibrium behavior:\n  - Analysts sell all the information they have to all the investors.\n  - Multiple equilibria can exist.\n  - Some equilibria feature an exacerbated beauty contest among analysts.\n- Information transmission:\n  - Due to correlation across analysts' information sources, not all available information in the economy is transmitted to investors.\n  - The beauty-contest incentives can reduce the effective dissemination of heterogenous information despite analysts selling their information."
    },
    {
      "heading": "Research metadata (as stated in the source)",
      "content": "- Authors: Celine Rochon, Gabriel Desgranges\n- Publication date: February 1, 2011\n- Series: Working Paper No. 2011/033\n\nIMF Working Papers — Conformism and Public News by Celine Rochon and Gabriel Desgranges, February 1, 2011.\n\n---\n\n Content in this bundle\n\n- wp1133\n  - wp1133 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp1133 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/conformism-and-public-news-24635"
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    "Authors: Celine Rochon, Gabriel Desgranges",
    "Published: February 1, 2011",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781455217939.001",
    "The paper studies a model where investment decisions are based on investors’ information about the unknown and endogenous return of the investment.",
    "Investors’ information consists of endogenously determined messages sold by financial analysts who have access to both public and private information on the return of the investment.",
    "The return of the investment is correlated with the aggregate investment, producing a beauty contest among analysts (a \"conformism\" effect).",
    "In equilibrium, analysts sell all the information they have to all the investors.",
    "There are sometimes multiple equilibria, including equilibria where the beauty contest is exacerbated.",
    "Because of correlation across analysts' information sources, not all the information available in the economy is transmitted to investors.",
    "Investment return is endogenous and unknown; analysts possess both public and private signals about that return.",
    "Correlation between the investment return and aggregate investment creates strategic incentives for analysts to coordinate on messages, generating a beauty-contest (conformism) dynamic.",
    "Analysts choose messages endogenously and sell those messages to investors; message provision and sales determine the information investors use for investment decisions.",
    "Equilibrium behavior:",
    "Information transmission:",
    "Authors: Celine Rochon, Gabriel Desgranges",
    "Publication date: February 1, 2011",
    "Series: Working Paper No. 2011/033",
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