Optimal Obscurity in the Acquisition and Disclosure of Information about a Shock
AbstractA principal acquires information about a shock and then discloses it to an agent. After the disclosure, the principal and agent each decide whether to take costly preparatory actions that yield benefits only when the shock strikes. The principal maximizes his expected payoff by controlling the quality of his information, and the disclosure rule. We show that even when the acquisition of perfect information is costless, the principal may optimally acquire imperfect information when his own action eliminates the agent's incentive to take action against the risk.
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Bibliographic InfoPaper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0832.
Date of creation: Feb 2012
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-27 (All new papers)
- NEP-CTA-2012-02-27 (Contract Theory & Applications)
- NEP-MIC-2012-02-27 (Microeconomics)
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- Fischhoff, Baruch, 1994. "What forecasts (seem to) mean," International Journal of Forecasting, Elsevier, vol. 10(3), pages 387-403, November.
- Helmut Bester & Roland Strausz, . "Imperfect Commitment and the Revelation Principle," Papers 004, Departmental Working Papers.
- Anke Kessler, 1998. "The Value of Ignorance," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 339-354, Summer.
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