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Acquisition and Disclosure of Information Prior to Sale

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Author Info
Steven Shavell

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Abstract

This article analyzes incentives to acquire information about the value of things before sales transactions, and voluntary versus required disclosure of such information. Two distinctions are emphasized: whether information is mere foreknowledge or instead can raise value -- has social value; and whether it is sellers or buyers who decide to acquire information. The main conclusions in the model are that voluntary disclosure results in socially excessive incentives to acquire information; mandatory disclosure is socially desirable for sellers; but for buyers, the freedom to keep silent may be needed to spur acquisition of socially desirable information.

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File URL: http://links.jstor.org/sici?sici=0741-6261%28199421%2925%3A1%3C20%3AAADOIP%3E2.0.CO%3B2-P&origin=repec
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Publisher Info
Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 25 (1994)
Issue (Month): 1 (Spring)
Pages: 20-36
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:rje:randje:v:25:y:1994:i:spring:p:20-36

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Web page: http://www.rje.org

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