the optimal use of information and the effectiveness of monetary policy

summary: the recent literature on the ineffectiveness of systematic monetary policy assumes that economic agents always use all the information available to them in formulating their economic decisions. this paper considers a set of circumstances inwhich agents have no incentive to do so. in particular, oligopolists may have no incentive to use all the information in their information sets whenever they believe that the implementation of systematic monetary policy (to influence real variables)would be collectively beneficial to them. these agents may then ensure the effectiveness of systematic monetary policy by devising their expectations on the basis of a restricted information set. their expectations-generating mechanism has no effecton real economic variables, provided, that this mechanism is systematic (i.e. predictable by the monetary authority).