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Optimality of the Disclosure of Private Information in a Production-Exchange Economy

Authors

  • BRETT TRUEMAN

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    • Graduate School of Management, University of California, Los Angeles. I would like to thank Professors Enrique Arzac, Krishna Ramaswamy, James Scott, Jr., and Sheridan Titman for their helpful comments. I am solely responsible for all remaining errors

ABSTRACT

This study provides an analysis of the effects on individual welfare of information revelation in a production-exchange economy. It is shown that the total effect of information revelation on an agent's utility level may be decomposed into three elements: a price effect, a shareholding effect, and a production effect. Through this decomposition, it is demonstrated that, although a Pareto improvement need not result from information revelation, there are perspectives from which the release can be considered beneficial.

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