Abstract

http://ssrn.com/abstract=1186322
 
 

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Information Management and Valuation: An Experimental Investigation


John W. Dickhaut


Chapman University (Deceased)

Margaret Ledyard


University of Texas at Austin - Department of Economics

Arijit Mukherji


Deceased

Haresh Sapra


University of Chicago - Booth School of Business

May 1, 2002


Abstract:     
We explore the management of information and the response of market prices to such information. Sellers may be uncertain of dividends. We examine whether sellers anticipate buyers' pricing behavior and whether buyers' prices reflect correct inferences of the disclosure strategy of sellers. Buyers' inferences and sellers' anticipation require implicit Bayesian updating in solving for the equilibrium decision strategies of sellers and pricing behavior of buyers. Because of traditional problems in inducing Bayesian behavior we employ a manual technology. Our results show that if we split selling strategies into "information management" (sanitization), full disclosure, and randomization, then the information disclosed is consistent with sellers anticipating buyers' pricing functional. Furthermore, prices themselves are sensitive to the information environment (Full Certainty, Intermediate Certainty, and Low Certainty) in which information asymmetry is manipulated.

Number of Pages in PDF File: 63

Keywords: sanitized disclosure, information management, sophisticated bidders, naive bidders, experimental economics

JEL Classification: D80, D82

working papers series





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Date posted: July 30, 2008  

Suggested Citation

Dickhaut, John W. and Ledyard, Margaret and Mukherji, Arijit and Sapra, Haresh, Information Management and Valuation: An Experimental Investigation (May 1, 2002). Available at SSRN: http://ssrn.com/abstract=1186322 or http://dx.doi.org/10.2139/ssrn.1186322

Contact Information

John Dickhaut
Chapman University (Deceased)
Margaret Ledyard
University of Texas at Austin - Department of Economics ( email )
Austin, TX 78712
United States
Arijit Mukherji
Deceased
N/A
Haresh Sapra (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
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