The Social Value of Asymmetric Information
AbstractA welfare analysis of a simple noisy rational expectations model is carried out. It is shown that the more information prices convey, the worse off everybody is. However, the equilibrium where everybody is uninformed may not be Pareto optimal: imposing a tax on information gathering which finances a lump sum grant may allow everybody to be better off when some people are informed. A corresponding result holds when the model is used to consider the release of information by firms: all shareholders may be better off if information is released to a group of insiders as a form of compensation.
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Bibliographic InfoPaper provided by Wharton School Rodney L. White Center for Financial Research in its series Rodney L. White Center for Financial Research Working Papers with number 23-84.
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- Franklin Allen, . "The Social Value of Asymmetric Information," Rodney L. White Center for Financial Research Working Papers 19-87, Wharton School Rodney L. White Center for Financial Research.
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- Jordi Caballe, 1991. "Expectativas racionales, competencia perfecta y comportamiento estratégico en los mercados financieros," Investigaciones Economicas, Fundación SEPI, vol. 15(1), pages 3-34, January.
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