The von Neumann and Morgenstern theory postulates that rational choice under uncertainty is equivalent to maximization of expected utility (EU). This view is mathematically appealing and natural because of the affine structure of the space of probability measures. Behavioural economists and psychologists, on the other hand, have demonstrated that humans consistently violate the EU postulate by ...

Condominium ownership is an important content of real property right. Based on the theory of information asymmetry, the author discussed the information asymmetry of exclusive parts and common parts in the process of transaction of real property right, and then took Uniform Condominium Act of America as a reference in order to provide solution ways for eliminating the information asymmetry of e...

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We propose and estimate a model of informed trading that is a hybrid of the PIN and Kyle models. The relationships between price impacts and the estimated parameters are consistent with the model’s theoretical predictions. We compare the hybrid model estimates to PIN estimates. The probability of information events in the PIN model is negatively correlated with the hybrid model’s estimated prob...

Financial Reporting, Regulation and Information Asymmetry

I this paper, we examine contracts to coordinate the capacity decision of a vendor who has been hired by a client to provide call center support. We consider a variety of contracts, all based on our observations of contracts used by one large vendor. We examine the role of different contract features such as pay-per-time, payper-call, service-level agreements, and constraints on service rates a...

The left and right hemispheres of humans do not handle all aspects of visual information processing with equal ability. This is illustrated by a review of research concerning the processing of global versus local stimulus properties, low versus high spatial frequencies, and coordinate versus categorical spatial relationships. In general, the right hemisphere is dominant for processing global as...

Evidence on adverse selection in slave markets remains inconclusive. A necessary prerequisite is that buyers and sellers have different information. We study informational asymmetry on the slave markets through notarial acts on public slave auctions in Mauritius between 1825 and 1835, involving 4,286 slaves. In addition to slave characteristics, the acts document the identities of buyers and se...

Operational risk incidences are likely to increase the degree of information asymmetry between firms and investors. We analyze operational risk disclosures by US financial firms during 1995–2009 and their impact on different measures of information asymmetry in the firms’ equity markets. Effective spreads and the price impact of trades are shown to increase around the first announcements of suc...