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Does a Non-verifiable Imperfect Informative Binary Signal Always a Strictly Positive Value?

Author

Listed:
  • Nien-Pen Liu

    (Department of Economics, Aletheia University, Tamsui, Taipei, Taiwan, R.O.C.)

  • Dachrahn Wu

    (Department of Economics, National Central University, Taiwan, R.O.C.)

Abstract

Owing to the difference between the status quo utility levels of a good agent and a bad agent, we find that a firm adopting a non-verifiable imperfect informative binary signal does not necessarily change its action (on trading off output efficiency against rent extraction). Hence, the signal does not always a strictly positive value for the firm.

Suggested Citation

  • Nien-Pen Liu & Dachrahn Wu, 2007. "Does a Non-verifiable Imperfect Informative Binary Signal Always a Strictly Positive Value?," Economics Bulletin, AccessEcon, vol. 10(7), pages 1-7.
    • Handle: RePEc:ebl:ecbull:eb-07j30013
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    References listed on IDEAS

    as
    1. Riordan, Michael H. & Sappington, David E. M., 1988. "Optimal contracts with public ex post information," Journal of Economic Theory, Elsevier, vol. 45(1), pages 189-199, June.
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    More about this item

    Keywords

    Ex Ante Non-verifiable Informative Signals Type-Dependent Status Quo Rent Extraction-Efficiency Trade-Off.;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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