Information value and efficiency measurement for risk-averse firms

Authors: Chambers, Robert¹; Quiggin, John²

Source: Journal of Productivity Analysis, Volume 27, Number 3, June 2007 , pp. 197-208(12)

Publisher: Springer

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Abstract:

This paper has three goals. First, we demonstrate that standard arguments and methods from production and duality analysis can be used to provide a comprehensive and general treatment of the value of information for a risk-averse firm with expected-utility (linear-in-probabilities) preferences and a general stochastic technology. Second, we place bounds on the value of information for a risk-averse firm and relate these bounds to characteristics of the technology and the producer's preferences. The third and final goal is to derive the implications that information differences can have for measured efficiency differences and to relate the bounds on the value of information to those measured differences.

Keywords: Information value; Efficiency; Productivity; D81; D84; D24; D61

Document Type: Research article

DOI: http://dx.doi.org/10.1007/s11123-007-0038-6

Affiliations: 1: Email: rchambers@arec.umd.edu 2: Email: j.quiggin@uq.edu.au

Publication date: 2007-06-01