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Value-Capture in the Face of Known and Unknown Unknowns

Burkhard Schipper (), Kevin Bryan and Michael Ryall
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Michael Ryall: Department of Economics, University of California Davis

No 333, Working Papers from University of California, Davis, Department of Economics

Abstract: A large theoretical literature on value capture following Brandenburger and Stuart (1996) uses cooperative games under complete information to study how and why firms earn supernormal profits. However, firms often have different information, beliefs, or creative foresight. We extend value capture theory to incomplete information (``known unknowns'') or unawareness (``unknown unknowns''), and illustrate some conceptual issues with that extension. Using the case study of Cirque du Soleil, we show how an entrepreneurial firm can profit even when it does not contribute materially to value creation.

Keywords: cooperative games; unawareness; incomplete information; coarse core; business strategy; value-capture theory (search for similar items in EconPapers)
JEL-codes: D21 D83 C71 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-ent and nep-gth
Date: 2019-08-28
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