A single piece of bad information can trigger a bank run or a currency crash—and this project builds a mathematical framework to predict when that happens. Current economic models only work for simple, two-choice situations. They cannot handle the complexity of real-world financial systems, where thousands of actors make interdependent decisions with incomplete and strategically manipulated information. The researcher has developed a new way to model "strategic types"—essentially, a mathematical language that describes what each player knows and how that knowledge shapes their choices in any given game. This project extends that proof-of-concept into a full theory. If successful, the work could reshape how regulators design stress tests for banks, how central banks communicate during a crisis, and how international trade networks are made resilient to shocks. One work package specifically targets informational interventions to shift social norms, including gender inequality. This is fundamental science—it builds the theoretical toolkit economists need before practical tools can be developed. Past work on global games, for instance, has already informed how the European Central Bank handles sovereign debt crises.
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In a world saturated with data, the role of information as a coordination device for economic activity is more and more central, and impacts phenomena such as financial crises, currency attacks and social stability. Although the importance of information as a driving force is well established, current models of coordination and robustness are limited to the restricted class of binary actions supermodular games. Following recent methodological advances of the PI as a proof of concept, the project offers a model of strategic types that will define the role of information in general strategic situations. Our methodology diverges from the conventional approach by reframing all information in relation to the game under study. Rather than considering information description as a distinct entity separate from the game itself, our approach centers on strategically relevant information within a particular, predetermined game context. SInfoNiA will create new foundations for the analysis of information in economics, and delve into new positive and normative implications of the theory as described in 7 work packages (WP). The first 4 WPs are methodological, they provide a model of strategic types for a wide array of games (WP1), develop new avenues to the measure and value of information (WP2), unify strategic types with global games information structures (WP3), and offer algorithms that will allow for wide applicability and dissemination of the methods (WP4). WP5 utilizes these methods to expand the global games frontier and to analyze new models of financial stability, while WP6 will offer a broad analysis of the robustness of economic outcomes, including in trade and financial networks. WP7 takes a normative approach and provides joint design of information structures and incentives that efficiently implement desirable outcomes. It offers informational interventions to bring on changes in social norms, in particular in gender inequality.
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