On the Value of Information in a Strategic Conflict

We consider a situation in which an agent M (the “maven”) possesses information relevant to the players of an n-person game in which he is not a participant. We define the “inducible set” as the set of ah outcomes which can be made unique Nash equilibria of a game resulting from the maven’s transmission of information. This inducible set is a formal expression of M’s ability to manipulate the game. We demonstrate some properties of the inducible set and characterize it for 2-person zero-sum games. Finally, we define the notion of the “value of information” possessed by M and provide an explicit formula to calculate this value in terms of the inducible set. Journal of Economic Literature Classification Number: 026. o 1990 Academic press. I K .