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An Entropy-Based Information Sharing Rule for Asymmetric Information Economies

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  • Meo Claudia

    (Dipartimento di Scienze Economiche e Statistiche, Universit` di Napoli Federico II, Naples, Italy)

Abstract

The possibility to compare information partitions is investigated for economies with asymmetric information. First, we focus on two potentially suitable instruments, the Boylan distance and the entropy, and show that the former does not fit the purpose. Then, we use the entropy associated with the information partition of each trader to construct a partially endogenous rule which regulates the information sharing process among traders. Finally, we apply this rule to some examples and analyze its impact on two cooperative solutions: the core and the coalition structure value.

Suggested Citation

  • Meo Claudia, 2021. "An Entropy-Based Information Sharing Rule for Asymmetric Information Economies," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 21(1), pages 315-346, January.
    • Handle: RePEc:bpj:bejtec:v:21:y:2021:i:1:p:315-346:n:11
    DOI: 10.1515/bejte-2020-0018
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    More about this item

    Keywords

    partitions; information sharing; Boylan distance; entropy; asymmetric information; cooperative solutions for exchange economies; C49; C71; D51; D82;
    All these keywords.

    JEL classification:

    • C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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