Cost information sharing with uncertainty averse firms

Jens Tapking

Economic Theory, 2004, vol. 23, issue 4, 879-907

Abstract: A homogeneous Cournot duopoly with asymmetric information is analyzed. Every firm learns its own marginal cost parameter, but not the marginal cost parameter of the opponent. Every firm can commit to revealing its private information to the other firm, i.e. to share information. The influence of uncertainty aversion on the readiness of the duopolists to share cost information is analyzed. Uncertainty aversion is modeled according to the Choquet utility theory. It is shown that low uncertainty aversion leads the firms to share information, while high uncertainty aversion leads the firms not to share. A simple economic explanation for this result is given. Copyright Springer-Verlag Berlin/Heidelberg 2004

Keywords: Choquet utility theory; Uncertainty aversion; Information sharing in oligopoly. (search for similar items in EconPapers)
Date: 2004
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DOI: 10.1007/s00199-003-0399-7

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