scholarly journals Crises and Prices: Information Aggregation, Multiplicity, and Volatility

2006 ◽  
Vol 96 (5) ◽  
pp. 1720-1736 ◽  
Author(s):  
George-Marios Angeletos ◽  
Iván Werning
Keyword(s):  
Private Information ◽  
Imperfect Information ◽  
Asset Price ◽  
Information Aggregation ◽  
Sources Of Information ◽  
Noisy Signal ◽  
Small Noise ◽  
Endogenous Information ◽  
Role Of Information

Crises are volatile times when endogenous sources of information are closely monitored. We study the role of information in crises by introducing a financial market in a coordination game with imperfect information. The asset price aggregates dispersed private information acting as a public noisy signal. In contrast to the case with exogenous information, our main result is that uniqueness may not obtain as a perturbation from perfect information: multiplicity is ensured with small noise. In addition, we show that: (a) multiplicity may emerge in the financial price itself; (b) less noise may contribute toward nonfundamental volatility even when the equilibrium is unique; and (c) similar results obtain for a model where individuals observe one another's actions, highlighting the importance of endogenous information more generally.

scholarly journals Learning from prices: information aggregation and accumulation in an asset market

2020 ◽  
Author(s):  
Michele Berardi
Keyword(s):  
Private Information ◽  
Dynamic Properties ◽  
Public Information ◽  
Information Aggregation ◽  
Time Varying ◽  
Private Signals ◽  
Private And Public ◽  
Fundamental Value ◽  
Over Time

Abstract Can prices convey information about the fundamental value of an asset? This paper considers this problem in relation to the dynamic properties of the fundamental (whether it is constant or time-varying) and the structure of information available to agents. Risk-averse traders receive two potential signals each period: one exogenous and private and the other, prices, endogenous and public. Prices aggregate private information but include aggregate noise. Information can accumulate over time both through endogenous and exogenous signals. With a constant fundamental, the precision of both private and public cumulative information increases over time but agents put progressively more weight on the endogenous signals, asymptotically disregarding private ones. If the fundamental is time-varying, the use of past private signals complicates the role of prices as a source of information, since it introduces endogenous serial correlation in the price signal and cross-correlation between it and innovations in the fundamental. A modified version of the Kalman filter can still be used to extract information from prices and results show that the precision of the endogenous signals converges to a constant, with both private and public information used at all times.

scholarly journals Heterogeneity of demand and product innovation

2017 ◽  
Vol 47 (1) ◽  
pp. 5-37 ◽  
Author(s):  
Thiago Caliari ◽  
Marco Valente ◽  
Ricardo Machado Ruiz
Keyword(s):  
Product Innovation ◽  
Imperfect Information ◽  
Evolutionary Model ◽  
Quality Of Information ◽  
Choice Procedures ◽  
Differentiated Goods ◽  
The Relationship ◽  
Role Of Information

Abstract This paper discusses the relationship between heterogeneity of demand regarding choice procedures and product innovation. We propose an evolutionary model showing how consumers with imperfect information chose and select differentiated goods. The model shows the role of information and choice procedures and its relation with the innovative process. The price plays an important role, but the quality of information, error tolerance and criteria for preference ordering are important determinants of the performance of firms in an industry with product innovation.

scholarly journals Modeling the Revolving Revolution: The Debt Collection Channel

2017 ◽  
Vol 107 (3) ◽  
pp. 897-930 ◽  
Author(s):  
Lukasz A. Drozd ◽  
Ricardo Serrano-Padial
Keyword(s):  
Information Technology ◽  
Private Information ◽  
Credit Cards ◽  
Consumer Debt ◽  
Widespread Adoption ◽  
Debt Collection ◽  
Role Of Information

We investigate the role of information technology (IT) in the collection of delinquent consumer debt. We argue that the widespread adoption of IT by the debt collection industry in the 1990s contributed to the observed expansion of unsecured risky lending such as credit cards. Our model stresses the importance of delinquency and private information about borrower solvency. The prevalence of delinquency implies that the costs of debt collection must be borne by lenders to sustain incentives to repay debt. IT mitigates informational asymmetries, allowing lenders to concentrate collection efforts on delinquent borrowers who are more likely to repay. (JEL D14, D82, G21, L84, M15, O33)

scholarly journals Humans Against Virus or Humans Against Humans: A Game Theory Approach to the COVID-19 Pandemic

2021 ◽  
Author(s):  
Santiago Forero-Alvarado ◽  
Nicolás Moreno-Arias ◽  
Juan J. Ospina-Tejeiro
Keyword(s):  
Game Theory ◽  
Private Information ◽  
Health Economy ◽  
Theory Approach ◽  
Welfare Losses ◽  
Key Characteristics ◽  
The Us ◽  
Containment Measures ◽  
Role Of Information

Externalities and private information are key characteristics of an epidemic like the Covid-19 pandemic. We study the welfare costs stemming from the incomplete information environment that these characteristics foster. We develop a framework that embeds a game theory approach into a macro SIR model to analyze the role of information in determining the extent of the health-economy trade-off of a pandemic. We apply the model to the Covid-19 epidemic in the US and find that the costs of keeping health information private are between USD $5.9$ trillion and USD $6.7$ trillion. We then find an optimal policy of disclosure and divulgation that, combined with testing and containment measures, can improve welfare. Since it is private information about individuals' health what produces the greatest welfare losses, finding ways to make such information known as precisely as possible, would result in significantly fewer deaths and significantly higher economic activity.

scholarly journals The Role of Information in Innovation and Competition

2015 ◽  
Vol 14 (4) ◽  
pp. 828-870 ◽  
Author(s):  
Ufuk Akcigit ◽  
Qingmin Liu
Keyword(s):  
Private Information ◽  
Trial And Error ◽  
Welfare Losses ◽  
Dead End ◽  
Wrong Direction ◽  
Efficiency Losses ◽  
Different Types ◽  
Information Externality ◽  
Role Of Information

Abstract Innovation is typically a trial-and-error process. While some research paths lead to the innovation sought, others result in dead ends. Because firms benefit from their competitors working in the wrong direction, they do not reveal their dead-end findings. Time and resources are wasted on projects that other firms have already found to be fruitless. We offer a simple model with two firms and two research lines to study this prevalent problem. We characterize the equilibrium in a decentralized environment that necessarily entails significant efficiency losses due to wasteful dead-end replication and an information externality that leads to an early abandonment of the risky project. We show that different types of firms follow different innovation strategies and create different kinds of welfare losses. In an extension of the core model, we also study a centralized mechanism whereby firms are incentivized to disclose their actions and share their private information in a timely manner.

Individual processing of phishing emails

2016 ◽  
Vol 40 (2) ◽  
pp. 265-281 ◽  
Author(s):  
Brynne Harrison ◽  
Elena Svetieva ◽  
Arun Vishwanath
Keyword(s):  
Private Information ◽  
Content Type ◽  
Online Fraud ◽  
Phishing Attacks ◽  
Effective Decision ◽  
Effective Decision Making ◽  
E Mail ◽  
Role Of Information ◽  
Insight Into

Purpose – The purpose of this paper is to explore user susceptibility to phishing by unpacking the mechanisms that may influence individual victimization. The focus is on the characteristics of the e-mail message, users’ knowledge and experience with phishing, and the manner in which these interact and influence how users cognitively process phishing e-mails. Design/methodology/approach – A field experiment was conducted where 194 subjects were exposed to a real phishing attack. The experimenters manipulated the contents of the message and measures of user traits and user processing were obtained after the phishing attack. Findings – Of the original list of targets, 47 percent divulged their private information to a bogus form page. Phishing susceptibility was predicted by a particular combination of both low attention to the e-mail elements and high elaboration of the phishing message. The presence of a threat or reward-based phishing message did not affect these processes, nor did it affect subsequent phishing susceptibility. Finally, individual factors such as knowledge and experience with e-mail increased resilience to the phishing attack. Research limitations/implications – The findings are generalizable to students who are a particularly vulnerable target of phishing attacks. Practical implications – The results presented in this study provide pragmatic recommendations for developing user-centered interventions to thwart phishing attacks. Lastly the authors suggest more effective educational efforts to protect individuals from such online fraud. Originality/value – This study provides novel insight into why phishing is successful, the human factor in susceptibility to online deception as well the role of information processing in effective decision making in this context. Based on the findings, the authors dispel common misconceptions about phishing and discuss more effective educational efforts to protect individuals from such online fraud.

An explanatory study into the information seeking-behaviour of Egyptian beggars

2016 ◽  
Vol 49 (1) ◽  
pp. 91-106 ◽  
Author(s):  
Essam Mansour
Keyword(s):  
Low Income ◽  
Information Seeking ◽  
Information Needs ◽  
Formal Education ◽  
Sources Of Information ◽  
Snowball Sampling ◽  
Demographic Group ◽  
Information Seeking Behaviour ◽  
Role Of Information

The key purpose of this study is to provide first-hand information about beggars in Egypt, especially from the perspective of their information-seeking behaviour including their information needs. It tries to investigate the information-seeking behaviour of Egyptian beggars with regard to their thoughts, perceptions, motivations, attitudes, habits, preferences as well as challenges that may impede their use of information. The research methods used were an adapted form of snowball sampling of a heterogeneous demographic group of participants in the beggary activity in Egypt. This sampling was used to select focus groups to explore a range of relevant issues. Data on the demographic characteristics of Egyptian beggars showed that they tend to be men, mostly with no formal education, with an average age around 30s, labelled as low-income persons, mostly single and mostly Muslims. A large number of Egyptian beggars were seeking for information to meet their basic daily needs, although some of them were not able to identify their information needs clearly. The information-seeking behaviour profile of a very large number of Egyptian beggars indicated a preference for informal sources of information over formal sources to solve different problems and meet the challenges faced during their beggary depending on assistive devices, predominantly mobile phones. The illiteracy and the lack of awareness about the basic rights of information as well as information needs were the most important difficulties Egyptian beggars face during accessing information. The study recommended that beggars’ awareness about their information rights should be promoted through educational programs that help them value the role of information in their life.

scholarly journals Understanding the role of information in marine policy development: establishing a coastal marine protected area in Nova Scotia, Canada

FACETS ◽  
2021 ◽  
Vol 6 ◽  
pp. 1539-1569
Author(s):  
Hali R. Moreland ◽  
Elizabeth M. De Santo ◽  
Bertrum H. MacDonald
Keyword(s):  
Nova Scotia ◽  
Protected Area ◽  
Policy Development ◽  
Marine Protected Area ◽  
Marine Policy ◽  
Sources Of Information ◽  
Consultation Process ◽  
Area Of Interest ◽  
Role Of Information

Canada has expanded its marine protected area (MPA) coverage in line with the Aichi Biodiversity Target of protecting 10% of its marine territory by 2020. In 2018, a consultation process was launched to designate an Area of Interest surrounding the Eastern Shore Islands area off the coast of Nova Scotia, as the potential 15th Oceans Act MPA in Canada ( DFO 2021a ). This region has a fraught history with external conservation interventions and, consequently, there was a significant level of local mistrust in the process. This study explored the role of information in the consultation process and how it interplayed with the historical context, political pressures, trust, and mistrust among stakeholders and rightsholders. Drawing on interviews, a detailed desktop analysis, and participant observation at consultation meetings, this paper describes what worked well and what could be improved with respect to the sources of information used and the channels through which stakeholders and rightsholders accessed it. This case study demonstrates that while preferences for information sources and channels are context specific and varied, they are inherently personal and influenced by shared histories, trust, and individual beliefs.

Technology-Mediated Dangerous Behaviors as Foraging for Social-Hedonic Rewards: The Role of Implied Inequality

MIS Quarterly ◽  
2021 ◽  
Vol 45 (3) ◽  
pp. 1249-1286 ◽  
Author(s):  
Ofir Turel ◽  
Keyword(s):  
Social Media ◽  
Risk Taking ◽  
Private Information ◽  
Theoretical Perspective ◽  
Risk Sensitivity ◽  
Total N ◽  
Risk Appetite ◽  
Dangerous Behaviors ◽  
Role Of Information

Technology-mediated dangerous behaviors (TMDBs), such as posting selfies while driving or posting private information, are prevalent and potentially require interventions. Knowledge about the drivers of these, and specifically the role of information in stimulating such behaviors, is limited. To address this gap, this paper turns to foraging and risk-sensitivity theories. These theories suggest that animals engage in more dangerous behaviors when their perceived need for calories is high. Similarly, humans increase financial risk-taking when they perceive dissatisfaction with what they have. Importantly, inequality information can increase such perceptions and change people’s risk-taking propensity. Adapting these ideas, the paper postulates that TMDBs resemble food-seeking in animals in that they are goal oriented, can be dangerous, and yield unknown (probabilistic) rewards. Therefore, TMDBs are explained using foraging and risk-sensitivity theory angles. Focusing on social media users (Studies 1-4; four experiments; total n = 2,504), I argue that (1) it is reasonable to view users as foraging the “fields of social media” for social-hedonic rewards, (2) it is possible to alter their risk appetite and TMDBs through inequality information and upward comparison mechanisms, (3) this process can be mediated not only through cognitions, but also emotions, and (4) perceived scarcity of rewards and social comparison orientation affect this process. With Study 5, the paper extends the core aspects of this theoretical perspective to the U.S. state level and argues that objective financial inequality can explain differences between states in terms of TMDBs such as texting while driving and relative interest in TMDBs such as prank videos. The findings largely support these assertions. They illuminate the role of information, notably inequality, in driving TMDBs, extend prior research focused on basic needs (e.g., physiological needs in the case of food intake decisions) to an evaluation of higher-order human needs (e.g., needs for belongingness, esteem, and self-actualization) catered to by nonphysiological, social-hedonic rewards, and point to important mechanisms that translate inequality into TMDBs.

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