Endogenous information acquisition in Bayesian games with strategic complementarities

This paper studies covert (or hidden) information acquisition in common value Bayesian games of strategic complementarities. Using the supermodular stochastic order to arrange the structures of information increasingly in terms of preferences, we provide novel, easily interpretable conditions under which the value of information is globally convex, and study the implications in terms of the equilibrium con…guration. Increasing marginal returns to information lead to extreme behavior in that agents opt either for the highest or the lowest quality signal. This result explains the complete information game as an endogenous outcome, and suggests the possibility of quite asymmetric information equilibria even in games that are themselves symmetric. Our analysis also enlightens the e¤ect of information on players’behavior. JEL codes: C44, C72, D83.