Title: Good News and Bad News: Representation Theorems and Applications
Abstract: This is an article about modeling methods in information economics. A notion of favorableness of news is introduced, characterized, and applied to four simple models. In the equilibria of these models, (1) the arrival of good news about a firm's prospects always causes its share price to rise, (2) more favorable evidence about an agent's effort leads the principal to pay a larger bonus, (3) buyers expect that any product information withheld by a salesman is unfavorable to his product, and (4) bidders figure that low bids by their competitors signal a low value for the object being sold.
Publication Year: 1981
Publication Date: 1981-01-01
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 3139
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