Disclosure Decision in an Entry Game With Costly Information Interpretation
Document Type
Article
Source of Publication
Global Economy Journal
Publication Date
3-1-2019
Abstract
© 2019 World Scientific Publishing Company. This paper analyzes a firm's incentives to disclose private information related to its market situation when there is a potential competitor. However, I adopt a more realistic definition of transparency that has been mostly overlooked by the earlier literature. In a realistic situation, financial transparency does not imply that all the relevant information are automatically transmitted to the receiver of the signal but instead the available information needs to be understood. When the model is adjusted to incorporate this realistic definition of transparency, fully revealing equilibrium associated with the "Revelation Principle" does not exist anymore. It is observed that the model with interpretation costs of transparency yields both pooling and partially pooling equilibria.
DOI Link
ISSN
Publisher
World Scientific Publishing Co. Pte Ltd
Volume
19
Issue
1
Disciplines
Business
Keywords
"Revelation Principle", costly information, transparency, Voluntary disclosure
Scopus ID
Recommended Citation
Orhun, Eda, "Disclosure Decision in an Entry Game With Costly Information Interpretation" (2019). All Works. 1282.
https://zuscholars.zu.ac.ae/works/1282
Indexed in Scopus
yes
Open Access
no