TY - JOUR
T1 - The value of information in production economies
AU - Eckwert, Bernhard
AU - Zilcha, Itzhak
N1 - Funding Information:
1We are grateful to Ed Schlee and to an anonymous referee for their insightful suggestions and comments. We are thankful to Andreas Szcutkowski for his important help. Financial support from the Stifterverband fur die Deutsche Wissenschaft and the Commerzbank is gratefully acknowledged.
PY - 2001
Y1 - 2001
N2 - It is known that Blackwell's (1953, Ann. Math. Statist. 24, 265-272) theorem, according to which more information always has positive value, does not hold in many economic circumstances. In particular, in exchange economies with random endowments it may fail completely. We show that in certain economies with risk averse consumers and risk neutral producers the Blackwell theorem holds in competitive equilibrium, given that risk sharing markets are absent. However, in the presence of a risk sharing market it is shown that for CRRA utility functions all agents may become (weakly) worse off with better information. Journal of Economic Literature Classification Numbers: D51, D80, G14.
AB - It is known that Blackwell's (1953, Ann. Math. Statist. 24, 265-272) theorem, according to which more information always has positive value, does not hold in many economic circumstances. In particular, in exchange economies with random endowments it may fail completely. We show that in certain economies with risk averse consumers and risk neutral producers the Blackwell theorem holds in competitive equilibrium, given that risk sharing markets are absent. However, in the presence of a risk sharing market it is shown that for CRRA utility functions all agents may become (weakly) worse off with better information. Journal of Economic Literature Classification Numbers: D51, D80, G14.
KW - Blackwell theorem
KW - Information system
KW - Risk sharing
UR - http://www.scopus.com/inward/record.url?scp=0035185899&partnerID=8YFLogxK
U2 - 10.1006/jeth.2000.2756
DO - 10.1006/jeth.2000.2756
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AN - SCOPUS:0035185899
SN - 0022-0531
VL - 100
SP - 172
EP - 186
JO - Journal of Economic Theory
JF - Journal of Economic Theory
IS - 1
ER -