On the information value of (un)embedded network ties

A firm sets up a network of information generating alliances to reduce technological uncertainty. This alliance group creates both advantages associated with similarity of existing partners and limitations due to restricted choice of new partners. Our model analyses the conditions (technological uncertainty, information overlap, alliance search costs, and the number of previous alliances) under which a firm opts for an embedded tie within an existing network or an unembedded tie with a new partner.Strategy;

The market for lawyers: The value of information on the quality of legal services

We study the value of information on the quality of legal services by analyzing the incentives of litigants to hire high-quality lawyers, the incentives of lawyers to invest in quality-enhancing activities and the effect of legal representation on the decision-making behaviour of adjudicators. In a setting where adjudicators have reputational concerns, we show that better information over the quality of legal representation generates a tradeoff. On the one hand, it allows for a better match between the value of a legal dispute and the quality of the legal representation. This also has the effect of increasing the incentives of lawyers to invest in quality-enhancing training. On the other hand, better information over the quality of legal representation may induce adjudicators to bias their decisions in favour of the litigant with the highest-quality lawyer and this generates allocative inefficiency. We discuss the implications of these effects on the desirability of quality certification system (such as the Queen’s Counselor system) in the market for the legal professions

What restrictions do Bayesian games impose on the value of information?

In a Bayesian game players play an unknown game. Before the game starts some players may receive a signal regarding the specific game actually played. Typically, information structures that determine different signals, induce different equilibrium payoffs.In zero-sum games the equilibrium payoff measures the value of the particular information structure which induces it. We pose a question as to what restrictions do Bayesian games impose on the value of information. We provide answers in two kinds of information structures: symmetric, where both players are equally informed, and one-sided where only one player is informed.value of information, zero-sum, information structure, partition, Beyesian game

On the market value of information commodities. I. The nature of information and information commodities

This article lays the conceptual foundations for the study of the market value of information commodities. The terms “information” and “commodity” are given precise definitions in order to characterize “information commodity,” and thus to provide a sound basis for examining questions of pricing. Information is used by marketplace actors to make decisions or to control processes. Thus, we define information as the ability of a goal‐seeking system to decide or control. By “decide” we mean choosing one alternative among several that may be executed in pursuit of a well‐defined objective. “Control” means the ordering of actions. Two factors make it possible to turn something into a commodity: (1) appropriability, and (2) valuability. If something cannot be appropriated (i.e., owned), it cannot be traded; moreover, if it cannot be valued, there is no way to determine for what it might be exchanged. We define an information commodity as a commodity whose function it is to enable the user, a goal‐seeking system, to obtain information, i.e., to otain the ability to decide or control. Books, databases, computer programs, and advisory services are common examples of information commodities. Their market value derives from their capacity to furnish information

Does the information environment affect the value relevance of financial statement data?

Recent studies demonstrate that the usefulness of financial statement data for valuation of stocks varies depending on specific economy- and firm-level conditions. This empirical study identifies a novel firm-level influential condition. It hypothesizes and finds that for firms that trade at a premium to book value the value-relevance of two fundamental financial statement value drivers (i.e. earnings and book value), is negatively related to the level of sophistication of the firm's information environment. However, for firms that trade at a discount to book value, the level of sophistication of information environment does not affect the value-relevance of these financial statement value drivers. The level of complexity of the firm's information environment is proxied by the firm's capitalized value. The empirical analysis is based on a sample of nonfinancial firms listed on the London Stock Exchange

Private value preturbations ad informational advantage in common value auctions

We analyze the value of being better informed than one’s rival in a two bidder, second price common value auction. In order to do so, we must pare down the continuum of equilibria that typically exists in this setting. We propose selecting an equilibrium that is robust to perturbing the common value of the object with small private value components. Under this selection, we show that having better information about the common value will frequently hurt rather than help a bidder and that the ratio of private value to common value information held by a bidder has a significant effect on the value of information