We explore how optimal information choices change the predictions of strategic models. When a large number of agents play a game with strategic complementarity, information choices exhibit complementarity as well: if an agent wants to do what others do, they want to know what others know. This makes heterogeneous beliefs difficult to sustain and may generate multiple equilibria. In models with substitutability, agents prefer to differentiate their information choices. We use these theoretical results to examine the role of information choice in recent price-setting models and to propose modelling techniques that ensure equilibrium uniqueness.

We characterize equilibria with endogenous debt constraints for a general equilibrium econ-omy with limited commitment in which the only consequence of default is losing the ability to borrow in future periods. First, we show that equilibrium debt limits must satisfy a simple con-dition that allows agents to exactly roll over existing debt period by period. Second, we provide an equivalence result, whereby the resulting set of equilibrium allocations with self-enforcing private debt is equivalent to the allocations that are sustained with unbacked public debt or rational bubbles. In contrast to the classic result by Bulow and Rogo § (AER, 1989), positive levels of debt are sustainable in our environment because the interest rate is su¢ciently low to provide repayment incentives. We thank for useful comments the editor, Harald Uhlig, three anonymous referees, Marios Angeletos, Andy