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Topic: Information asymmetry

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Asymmetrical information

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Information economics

The Market for Lemons

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	Teacher's Corner: Implications of Costly Information: Library of Economics and Liberty
		In this respect, information is a good, and people need to decide how much of their resources they want to devote to acquiring it, just like they need to decide how much to spend on housing, cookies, swimming lessons, and everything else.
		Given that the choice of how much information a person acquires is based on his or her own unique preferences and resources, it is not surprising that there are great differences, or asymmetries, in the amount of information people have about any given market.
		What the two cases of information asymmetry have hopefully shown is that if there are gains to be had by the dissemination of information, then that information will be spread, and spread by people acting of their own accord and in their own self-interest.
	www.econlib.org /library/Columns/Teachers/information.html (3108 words)

	Information asymmetry - Wikipedia, the free encyclopedia
		In economics, information asymmetry occurs when one party to a transaction has more or better information than the other party.
		Examples of situations where the seller usually has better information than the buyer are numerous but include used-car salespeople, stockbrokers, real estate agents, and life insurance transactions.
		Information asymmetry has recently been noted to be on the decline thanks to the Internet, which allows unknowledgeable users to acquire heretofore unavailable information such as the costs of competing insurance policies, used cars, etc. (see Freakonomics)
	en.wikipedia.org /wiki/Information_asymmetry (310 words)

	The Market for Lemons - Wikipedia, the free encyclopedia
		The paper by Akerlof describes how the interaction between quality heterogeneity and asymmetrical information can lead to the disappearance of a market where guarantees are indefinite.
		In this model, as quality is undistinguishable beforehand by the buyer (due to the asymmetry of information), incentives exist for the seller to pass off a low-quality good as a higher-quality one.
		The result is that a market in which there is asymmetrical information with respect to quality shows characteristics similar to those described by Gresham's Law: the bad drives out the good.
	en.wikipedia.org /wiki/The_Market_for_Lemons (854 words)

	Level of information asymmetry and market impact of seasoned equity announcement: a comparison of market reaction ...
		Raymar (1993) argued that leverage of firm is negatively correlated to information asymmetry.
		Information asymmetry theory also suggests a positive correlation between the level of information asymmetry and the level of value drop in the vent of equity financing (Dierkerns, 1991).
		Identification of the factors affecting the level of information asymmetry was the subject of several studies.
	findarticles.com /p/articles/mi_m0OGT/is_1_3/ai_n8690368 (886 words)

	Encyclopedia: Information asymmetry (Site not responding. Last check: )
		This section is studied by Argagui monopoli In law and economics, moral hazard is the name given to the risk that one party to a contract can change their behaviour to the detriment of the other party once the contract has been concluded.
		Because information is costly, there is so much of it out there, and people have so many other desires beside acquiring information, they are not likely even to be able to approach full and perfect knowledge on any subject.
		An interesting feature of this scenario is that unlike the producer enjoying secrecy in production, who was better off the longer he maintained his asymmetry in information, the wine-maker here would be better off if the asymmetry did not exist.
	www.nationmaster.com /encyclopedia/Information_asymmetry (787 words)

	Chia (1995) The interaction effect of information asymmetry and decentralization on managers' job satisfaction: a ... (Site not responding. Last check: )
		This study investigates the interaction effect of information asymmetry and decentralization on the job satisfaction level of sub-unit managers.
		The findings indicate the presence of nonmonotonic relationship between information asymmetry and job satisfaction over the range of the degree of decentralization in the organizations.
		More specifically, the results indicate that a higher level for information asymmetry was associated with a higher level of job satisfaction for managers working under conditions of high decentralization.
	www.getcited.org /pub/103359778 (125 words)

	Information Asymmetry In Information Age (Site not responding. Last check: )
		The story of information asymmetry was brought fourth by three Nobel Prize winners in Economics in 2001- George Akerlof, Michael Spence and Joseph Stiglitz.
		At the first glance, nothing seem to be new as it is well known that in the age of information, super information and over information, to catch the fancy, one has to incorporate some digital jargon in even the purest theoretical expedition.
		But if the information about the quality is costly to obtain, then this information asymmetry between buyer and sellers interfere with the efficient functioning of the whole market.
	www.indiainfoline.com /bisc/inas.html (1560 words)

	AN EXAMINATION OF THE RELATIONSHIPS AMONG BUDGETARY PARTICIPATION, BUDGET EMPHASIS, INFORMATION ASYMMETRY, BUDGET ... (Site not responding. Last check: )
		Information Asymmetry Subordinates often acquire private information for the process of discharging their delegated duties.
		An information asymmetry exists whenever information is known to the subordinates but not to their superiors.
		Apart from participation of subordinates, budget emphasis and information asymmetry, the role of attitudes of the subordinates towards budgets may directly and indirectly contribute to reducing or increasing the budgetary slack.
	mgv.mim.edu.my /MMR/9503/950307.Htm (2323 words)

	St. Louis Fed: WP 1994-005A "The Bank Capital Requirement and Information Asymmetry"
		This paper recognizes two main factors that cause the capital requirement to affect the weighted average cost of capital and hence the investment behavior of banks: underpriced debt resulting from the deposit insurance and information asymmetry between managers and the stock market.
		When the stock market underestimates the value of a bank due to information asymmetry, equity financing is expensive.
		This paper finds that banks constrained by the tightened capital requirement grew slower in 1991 and that information asymmetry as well as underpriced deposits played a role in explaining the slower growth.
	research.stlouisfed.org /wp/more/1994-005 (133 words)

	Breast asymmetry surgery information and procedures (Site not responding. Last check: )
		For more detailed information about how these procedures may help you, we recommend that you consult a plastic surgeon who is board certified or has completed a residency program that includes instruction in these procedures.
		There is no known association of breast implants with breast cancer in human beings, and in fact several large studies have shown a lower incidence of breast cancer in women with breast implants.
		The information on this web site is intended only as an introduction to this procedure and should not be used to determine whether you will have the procedure performed nor as a guarantee of the result.
	www.enhancebreast.com /breastasymmetry.html (2808 words)

	[No title] (Site not responding. Last check: )
		In economics, information asymmetry occurs when one 7 party to a transaction 4 has more or 5 better information than the 1 other party.
		Examples of 1 situations where the 4 seller usually has better 1 information than the 1 buyer are numerous but 9 include stockbrokers, real 5 estate agents, and 2 life insurance transactions.
		Examples of 0 situations where the 4 buyer usually has 0 better information than the 3 seller include estate sales 1 as specified in a 2 last will and 6 testament.
	www.thelifeinsurance.net /information_asymmetry_.htm (278 words)

	Information asymmetry (Site not responding. Last check: )
		Examples of situations where the seller usually has better information than the buyer are numerous but include stockbrokers, real estate agents, and life insurance transactions.
		This situation was first described in by George Akerlof (who coined the term asymmetric information) in his 1970 work The Market for Lemons.
		He also noticed that, in such a market,the average value of the commodity tends to go down, even for those of perfectly good quality.
	www.portaljuice.com /information_asymmetry.html (235 words)

	[No title]
		The return to an asset over a period would then be positively related to the extent of information asymmetry at the beginning of the period and inversely related to the extent of information asymmetry at the end of the period.
		As information asymmetry is not directly observable, we require a proxy for it.
		The informed traders have superior information compared to the market makers, and they earn more than the riskless rate on their investment (except when their orders are completely revealing and then they earn the riskless rate).
	www.cob.ohio-state.edu /fin/faculty/sen/DynamicModCOB.doc (3516 words)

	Ballerinas and Information Asymmetry - Freakonomics - Opinion - New York Times Blog
		We’ve written quite a bit about various information asymmetries — i.e., when one party in a transaction has a lot more information than another — and how the Internet is very good at correcting that asymmetry.
		When you discuss information asymmetry, you have to take into consideration that not only is information asymmetric, but opportunity is as well.
		Information is useless if you don’t know how to understand and implement it.
	freakonomics.blogs.nytimes.com /2008/06/09/ballerinas-and-information-asymmetry (3190 words)

	Dialogue and policy design amid information asymmetry- Policy-Economy-News-The Economic Times
		When it comes to fresh thinking in the realm of public policy, the insight provided by the new economics of information has meant a âparadigm shift.â Factoring in âasymmetries of informationâ among market participants, it has been shown that the âmany and sometimes subtle waysâ in which markets can fail to lead to efficient outcomes.
		Rather, the bundle of contradictions were the inevitable consequence of (a) the limitations of information contained in repressed prices, and (b) the gap between the set of goods for which markets can artificially exist and the much broader set of present and future goods required for economic welfare.
		Given this âasymmetry of information,â the logical way ahead is to distribute a given tax burden according to differences in ability to pay.
	economictimes.indiatimes.com /News/Economy/Policy/Dialogue_and_policy_design_amid_information_asymmetry/rssarticleshow/2716537.cms (1018 words)

	Goizueta Business School Paper Series - Conference Calls and Information Asymmetry
		We hypothesize that conference calls are voluntary disclosures that lead to long-term reductions in information asymmetry among equity investors.
		Cross-sectional and time-series tests show that the level of information asymmetry is negatively associated with conference call activity.
		Since prior work has shown that the cost of equity capital is increasing with information asymmetry, our results suggest that firms that hold conference calls more frequently have lower costs of capital.
	gbspapers.library.emory.edu /archive/00000188 (181 words)

	Executive Summary: From Value to Advantage: Exploiting Information
		The information capabilities of such enterprises—IT practices, information management, and values and behaviors—are collectively known as "information orientation." Information orientation, more difficult to duplicate than technology, correlates strongly with improved business performance.
		Better information creates lasting competitive advantage only when an enterprise is ready to use the information to support a winning strategy.
		Information management is the mechanism for identifying and leveraging critical business information.
	www.gartner.com /DisplayDocument?doc_cd=121319 (841 words)

	Genuine VC: An Entrepreneur’s Perspective on Information Asymmetry in Bootstrapping
		Her perspective is grounded on the fact that a significant information asymmetry that exists between an entrepreneur and his or her constituents, especially extremely early in company formation.
		Because of this differing level of information among each party, her constituents are going to perceive her venture to be riskier than it actually is. And investors and employees are going to want a higher compensation-level for that added perceived risk.
		And her view about the information asymmetry that exists early in a company is both insightful and real.
	www.genuinevc.com /archives/2005/06/an_entrepreneur.htm (2142 words)

	Information asymmetry - Encyclopedia, History, Geography and Biography
		Information asymmetry - Encyclopedia, History, Geography and Biography
		This page was last modified 09:19, 21 November 2005.
		This encyclopedia, history, geography and biography article about Information asymmetry contains research on
	www.arikah.com /encyclopedia/Asymmetric_information (332 words)

	Goizueta Business School Paper Series - Disclosure Quality and Information Asymmetry
		We examine the association between firms' disclosure quality and information asymmetry using a three-stage least squares estimation procedure that takes into account the endogeneity between these two variables.
		Our measure of information asymmetry is based on the Probability of Informed Trade (Easley, Kiefer and O'Hara [1997]), which measures the probability of information-based trade.
		Since prior work indicates that the cost of equity capital is increasing with information asymmetry, our results suggest that firms with higher disclosure quality have lower costs of capital.
	gbspapers.library.emory.edu /archive/00000131 (198 words)

	Trading Volume, Information Asymmetry And Disclosure Of Annual Reports For Distressed Firms (Site not responding. Last check: )
		This study investigates the relation between predisclosure information asymmetry, trading volume, and the release of annual reports to shareholders when firms near financial distress.
		The first hypothesis is that the level of predisclosure information asymmetry, as captured in bid-ask spread, is positively related to degree of financial distress.
		The second hypothesis predicts that trading volume at the release of annual reports is positively related to temporal variations in the extent of predisclosure information asymmetry as firms near distress.
	crab.rutgers.edu /~kwonss/abs3.htm (226 words)

	SSRN-Information Asymmetries and the Rights to Exclude by Lior Strahilevitz
		Where third parties seeking to use property possess private information about their own preferences, behaviors, and intentions, and the owner cannot discover this private information at a low cost, the owner is likely to delegate the exclusion function to the would-be entrants by employing non-trespass-based exclusion strategies.
		By contrast, where there is little private information involved, or private information can be discovered by the owner at a low cost, the owner is more likely to employ trespass-based exclusion rights.
		This relationship between information asymmetries and the choice of exclusion strategies suggests new possibilities for creative government intervention in those settings where particular exclusion strategies conflict with public policy interests.
	papers.ssrn.com /sol3/papers.cfm?abstract_id=844410 (549 words)

	International Trade Policy Information Asymmetry
		In the presence of free entry and exit, the optimum subsidy is therefore 5%: a larger subsidy will force at least one foreign producer out of the domestic market and consumer surplus will fall, since Norwegian consumers will no longer have access to this brand of ski.
		In the absence of information on entry conditions (or more generally, on the fixed costs of new firms which might enter the market), the government could decide the optimum subsidy on the basis of a maximin criterion, i.e.
		The two examples also show that the information needed to design optimum policies is of a kind which the government is unlikely to have, but which the market agents may possess.
	www.cepr.org /pubs/Bulletin/dps/dp218.htm (1578 words)

	Information Asymmetry, Market Segmentation and the Pricing of Cross-listed Shares: Theory and Evidence From Chinese A ...
		We argue that one reason for the large price discount of B shares is because foreign investors have less information on Chinese stocks than domestic investors.
		We develop a model, incorporating both informational asymmetry and market segmentation, and derive a relative pricing equation for A shares and B shares.
		Specifically, we show that our model-based proxies for informational asymmetry explain a significant portion of the cross-sectional variation of the B share discounts.
	www.newyorkfed.org /research/staff_reports/research_papers/9820.html (192 words)

	Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J. Dubner - ...
		As information goes, such terms are specific and straightforward-and therefore pretty useful.
		She might tell this buyer about a house nearby that just sold for $25,000 above the asking price, or another house that is currently the subject of a bidding war.
		She is careful to exercise every advantage of the information asymmetry she enjoys.
	www.freakonomics.com /ch2.php (651 words)

	AFDQ : Unfree markets / Information asymmetry (Site not responding. Last check: )
		Clearly this is not a level playing field in terms of information.
		A favorite example, which I chant about regularly, was proposed by George Akerlof in his classic analysiis of assymetric information and the Market for Lemons, which is not a piece of applied work in agricultural economics.
		I can't tell whether or not the car is a lemon, but know that that information is available to you.
	www.cs.ncl.ac.uk /people/chris.holt/home.informal/bar/corsair.afdq/info/unfree.markets/information.asymmetry.html (280 words)

	Information Asymmetry and Economic Concentration: The Case of Hens and Eggs in Eastern Indonesia
		Information Asymmetry and Economic Concentration: The Case of Hens and Eggs in Eastern Indonesia
		Access to capital and information is limited for the rural poor and uneducated people.
		A conclusion is that linkages and rural employment creation strategies should aim towards mobilising the variety of local natural and cultural resources and encourage horizontal communication and economic transactions between regions and peoples.
	www.fao.org /docrep/007/ae055e/ae055e00.htm (213 words)

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