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Risk Advantages and Information Acquisition

Palfrey, Thomas R. (1982) Risk Advantages and Information Acquisition. Bell Journal of Economics, 13 (1). pp. 219-224. ISSN 0361-915X. doi:10.2307/3003443.

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In some competitive situations under uncertainty, less risk adverse competitors have an advantage over more risk adverse opponents. Private information acquisition by the advantaged players diminishes this advantage by reducing the risk faced by their opponents in a Nash equilibrium. This tradeoff between risk advantages and informational advantages is examined in the context of a duopoly model with uncertain demand. It is found that private information acquisition may reduce the risk advantage by so much that the overall effect is to make the informed, less risk adverse competitor worse off and the uninformed, more risk adverse competitor better off.

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URLURL TypeDescription Article Article
Palfrey, Thomas R.0000-0003-0769-8109
Additional Information:The Bell Journal of Economics © 1982 RAND Corporation. Spring 10982. I wish to thank Alvin Klevorick, Tom Lee, and a reader for The Bell Journal of Economics for helpful comments.
Issue or Number:1
Record Number:CaltechAUTHORS:20160303-101627882
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Official Citation:Palfrey, T. R.. (1982). Risk Advantages and Information Acquisition. The Bell Journal of Economics, 13(1), 219–224.
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:64996
Deposited On:09 Mar 2016 22:56
Last Modified:10 Nov 2021 23:38

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