Strategic Obscurity in the Forecasting of Disasters

Masaki Aoyagi

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: 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 mutual benefits but only when the shock strikes. The principal maximizes his expected payoff by ex ante committing to 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.

Date: 2012-02, Revised 2014-07
New Economics Papers: this item is included in nep-cta and nep-mic
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Related works:
Journal Article: Strategic obscurity in the forecasting of disasters (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:0832r

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