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Entropy and the value of information for investors: The prior-free implications

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  • Shorrer, Ran I.

Abstract

The partial order of prior-independent investment dominance (Cabrales et al., 2013) strictly extends Blackwell’s order over information structures. I provide a complete characterization for the case of two states and two signals.

Suggested Citation

  • Shorrer, Ran I., 2018. "Entropy and the value of information for investors: The prior-free implications," Economics Letters, Elsevier, vol. 164(C), pages 62-64.
    • Handle: RePEc:eee:ecolet:v:164:y:2018:i:c:p:62-64
    DOI: 10.1016/j.econlet.2018.01.001
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    References listed on IDEAS

    as
    1. Frankel, David M. & Volij, Oscar, 2011. "Measuring school segregation," Journal of Economic Theory, Elsevier, vol. 146(1), pages 1-38, January.
    2. Antonio Cabrales & Olivier Gossner & Roberto Serrano, 2013. "Entropy and the Value of Information for Investors," American Economic Review, American Economic Association, vol. 103(1), pages 360-377, February.
    3. Sergiu Hart, 2011. "Comparing Risks by Acceptance and Rejection," Journal of Political Economy, University of Chicago Press, vol. 119(4), pages 617-638.
    4. Nicola Persico, 2000. "Information Acquisition in Auctions," Econometrica, Econometric Society, vol. 68(1), pages 135-148, January.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Chady Jabbour & Anis Hoayek & Jean-Michel Salles, 2022. "Formalizing a Two-Step Decision-Making Process in Land Use: Evidence from Controlling Forest Clearcutting Using Spatial Information," Land, MDPI, vol. 12(1), pages 1-17, December.

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    More about this item

    Keywords

    Informativeness; Information structures; Entropy; Decision under uncertainty; Investment; Blackwell ordering;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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