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Does a Non-verifiable Imperfect Informative Binary Signal Always Create a Strictly Positive Value?

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Author Info
Nien-Pen Liu () (Department of Economics, Aletheia University, Tamsui, Taipei, Taiwan, R.O.C.)
Dachrahn Wu () (Department of Economics, National Central University, Taiwan, R.O.C.)
Abstract

Owing to the difference between the status quo utility levels of a good agent and a bad agent, we find that a firm adopting a non-verifiable imperfect informative binary signal does not necessarily change its action (on trading off output efficiency against rent extraction). Hence, the signal does not always create a strictly positive value for the firm.

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File URL: http://economicsbulletin.vanderbilt.edu/2007/volume10/EB-07J30013A.pdf
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Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.

Volume (Year): 10 (2007)
Issue (Month): 7 ()
Pages: 1-7
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ebl:ecbull:v:10:y:2007:i:7:p:1-7

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Related research
Keywords: Ex Ante Non-verifiable Informative Signals; Type-Dependent Status Quo; Rent Extraction-Efficiency Trade-Off.;

Find related papers by JEL classification:
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Cremer, Jacques & McLean, Richard P, 1988. "Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions," Econometrica, Econometric Society, vol. 56(6), pages 1247-57, November. [Downloadable!] (restricted)
  2. Riordan, Michael H. & Sappington, David E. M., 1988. "Optimal contracts with public ex post information," Journal of Economic Theory, Elsevier, vol. 45(1), pages 189-199, June. [Downloadable!] (restricted)
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