A Note on the Property Rights Theory and the Ex Ante Value of Information

11 Pages Posted: 15 Mar 2014

Date Written: April 2014

Abstract

This paper examines the ex ante value of information in the property rights model where the possibility exists that an investing agent can be provided with relevant information before investments are undertaken. When contracts are incomplete, from an ex ante perspective, informing the investing agent does not necessarily increase the expected surplus resulting from a relationship between two economic agents. The paper highlights the fact that the second‐best nature of the problem that arises from contractual incompleteness can ensure this.

Keywords: incomplete contracts, property rights theory, second‐best investments, value of information

JEL Classification: D23, D80

Suggested Citation

Mohan, Vijay, A Note on the Property Rights Theory and the Ex Ante Value of Information (April 2014). Bulletin of Economic Research, Vol. 66, Issue 2, pp. 205-215, 2014, Available at SSRN: https://ssrn.com/abstract=2409347 or http://dx.doi.org/10.1111/j.1467-8586.2011.00412.x

Vijay Mohan (Contact Author)

RMIT University ( email )

124 La Trobe Street
Melbourne, 3000
Australia

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