Get access

Sufficient and Necessary Conditions for Information to have Social Value in Pure Exchange

Authors

  • NILS H. HAKANSSON,

  • J. GREGORY KUNKEL,

  • JAMES A. OHLSON

    Search for more papers by this author
    • University of California, Berkeley and Bell Labs, Murray Hill, New Jersey; Northwestern University; and University of California, Berkeley. This research was partially supported by Grant SOC 77–09482 from the National Science Foundation and by the Professional Accounting Program, School of Business Administration, University of California, Berkeley. An earlier version of the paper was presented at Stanford University and at Oxford University. The authors are grateful to the participants of these seminars, especially Robert Freeman and Joseph Stiglitz, and to Alan Kraus and the editor for helpful comments.

ABSTRACT

This paper extends, corrects, and unifies earlier statements concerning the social value of public information as well as the no-trading conditions in pure exchange. Sufficient and necessary conditions are provided for both the single-period and two-period cases in a postsignal trading model. The social value of information is shown to be closely linked to the allocational efficiency of the market, the degree of homogeneity of prior beliefs, and of information structures, the time-additivity of preferences, and the efficiency of endowments. We conclude that the case in favor of public information is much stronger than previously suggested.

Get access to the full text of this article

Ancillary