Information and the Risk-Averse Firm

Robert Chambers () and John Quiggin

No WPR03_2, Risk & Uncertainty Working Papers from Risk and Sustainable Management Group, University of Queensland

Abstract: This paper has two goals. First,we demonstrate that standard arguments and methods from production and duality analysis can be used to provide a comprehensive and general treatment of the value of information for a risk-averse firm with expected-utility (linear-in-probabilities) preferences and a general stochastic technology. Second, we place bounds on the value of information for a risk-averse firm and relate these bounds to characteristics of the technology and the producer's preferences. A particularly striking observation that emerges from this representation is that the most common representation of production uncertainty corresponds to a polar case that trivializes the role that information can play in economic decision making under risk.

Keywords: state-contingent production; value of information (search for similar items in EconPapers)
JEL-codes: D8 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Information and the risk-averse firm (2003)
Working Paper: Information and the Risk-Averse Firm (2001)
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