Incomplete Risk Sharing Arrangements and the Value of Information

B. Eckwert and Itzhak Zilcha

Working Papers from Tel Aviv

Abstract: The paper constructs a theoretical framework in which the value of information in general equilibrium can be linked to the efficiency of the risk sharing mechanism. We demonstrate that in economies with production, information may have negative value even though no risk sharing markets exist. As a rule of thumb the value of information tends to be lower the more efficiently macroeconomic risks are allocated. In particular, for parametrizations which result in a perfectly inefficient risk allocation the Blackwell Theorem generalizes to full equilibrium.

Keywords: GENERAL EQUILIBRIUM; INFORMATION; RISK (search for similar items in EconPapers)
JEL-codes: D51 D52 D8 (search for similar items in EconPapers)
Pages: 22 pages
Date: 1999
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Citations: View citations in EconPapers (3)

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Journal Article: Incomplete risk sharing arrangements and the value of information (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:teavfo:13-99

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