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The Competitive Firm'S Willingness To Pay For Information

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  • Chalfant, James A.
  • Finkelshtain, Israel
  • Gray, Richard S.

Abstract

We examine the competitive firm's willingness to pay for a perfect price forecast. The conventional compensating variation measure can understate the value to risk-averse firms of such a forecast. A Pareto efficient contract contingent on realized prices dominates and shows that information's value is larger the greater is risk aversion.

Suggested Citation

  • Chalfant, James A. & Finkelshtain, Israel & Gray, Richard S., "undated". "The Competitive Firm'S Willingness To Pay For Information," 1989 Annual Meeting, July 30-August 2, Baton Rouge, Louisiana 270477, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea89:270477
    DOI: 10.22004/ag.econ.270477
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    References listed on IDEAS

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    1. Graham-Tomasi, Theodore, 1988. "A Theoretical and Empirical Approach to the Value of Information in Risky Markets: A Comment," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 543-545, August.
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    5. Gould, John P., 1974. "Risk, stochastic preference, and the value of information," Journal of Economic Theory, Elsevier, vol. 8(1), pages 64-84, May.
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    7. Hess, James, 1982. "Risk and the gain from information," Journal of Economic Theory, Elsevier, vol. 27(1), pages 231-238, June.
    8. Antonovitz, Frances & Roe, Terry, 1986. "A Theoretical and Empirical Approach to the Value of Information in Risky Markets," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 105-114, February.
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