Information and the risk-averse firm

Robert G. Chambers and John Quiggin

No 150344, Risk and Sustainable Management Group Working Papers from University of Queensland, School of Economics

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: Risk; and; Uncertainty (search for similar items in EconPapers)
Pages: 25
Date: 2003-10
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https://ageconsearch.umn.edu/record/150344/files/WPR03_2.pdf (application/pdf)

Related works:
Working Paper: Information and the Risk-Averse Firm (2001)
Working Paper: Information and the Risk-Averse Firm
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uqsers:150344

DOI: 10.22004/ag.econ.150344

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