Optimal Obscurity in the Acquisition and Disclosure of Information about a Shock
A 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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- Richard R. Nelson & Sidney G. Winter, 1964. "A Case Study in the Economics of Information and Coordination the Weather Forecasting System," The Quarterly Journal of Economics, Oxford University Press, vol. 78(3), pages 420-441.
- 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.
- Fischhoff, Baruch, 1994. "What forecasts (seem to) mean," International Journal of Forecasting, Elsevier, vol. 10(3), pages 387-403, November.
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