{"title":"Information asymmetry, attitudes toward risk, and macroeconomic performance","authors":"T.V.S. Ramamohan Rao","doi":"10.1016/j.rie.2023.01.010","DOIUrl":null,"url":null,"abstract":"<div><p>Every firm in differentiated oligopoly offers a product that is different from that of rival firms. Similarly, in general, a firm interfaces with consumers and interacts with rival firms on the market. As a result, both the firm and consumers experience information asymmetry. In practice, a firm is a risk taker in its dealings with rival firms and is a risk averter in its interface with consumers. However, firms utilize intangible investments (non-price strategies) to convey the value of their product to consumers and stabilize their market share. Note that consumers are risk averse and ignore such attempts by a firm once they recognize the intrinsic value of the product. These two features explain the frequency and depth of the supply fluctuations that have not been acknowledged so far. This study offers a fundamental explanation of this phenomenon along with the steady state behavior in a synthetic manner.</p><p>“With uncertainty entirely absent, every individual being in possession of perfect knowledge of the situation, there would be no occasion for anything of the nature of responsible management or control of production activity.”- <span>Knight (1957</span>, p.267)</p></div>","PeriodicalId":46094,"journal":{"name":"Research in Economics","volume":"77 1","pages":"Pages 178-184"},"PeriodicalIF":1.2000,"publicationDate":"2023-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Research in Economics","FirstCategoryId":"1085","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1090944323000054","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 1
Abstract
Every firm in differentiated oligopoly offers a product that is different from that of rival firms. Similarly, in general, a firm interfaces with consumers and interacts with rival firms on the market. As a result, both the firm and consumers experience information asymmetry. In practice, a firm is a risk taker in its dealings with rival firms and is a risk averter in its interface with consumers. However, firms utilize intangible investments (non-price strategies) to convey the value of their product to consumers and stabilize their market share. Note that consumers are risk averse and ignore such attempts by a firm once they recognize the intrinsic value of the product. These two features explain the frequency and depth of the supply fluctuations that have not been acknowledged so far. This study offers a fundamental explanation of this phenomenon along with the steady state behavior in a synthetic manner.
“With uncertainty entirely absent, every individual being in possession of perfect knowledge of the situation, there would be no occasion for anything of the nature of responsible management or control of production activity.”- Knight (1957, p.267)
期刊介绍：
Established in 1947, Research in Economics is one of the oldest general-interest economics journals in the world and the main one among those based in Italy. The purpose of the journal is to select original theoretical and empirical articles that will have high impact on the debate in the social sciences; since 1947, it has published important research contributions on a wide range of topics. A summary of our editorial policy is this: the editors make a preliminary assessment of whether the results of a paper, if correct, are worth publishing. If so one of the associate editors reviews the paper: from the reviewer we expect to learn if the paper is understandable and coherent and - within reasonable bounds - the results are correct. We believe that long lags in publication and multiple demands for revision simply slow scientific progress. Our goal is to provide you a definitive answer within one month of submission. We give the editors one week to judge the overall contribution and if acceptable send your paper to an associate editor. We expect the associate editor to provide a more detailed evaluation within three weeks so that the editors can make a final decision before the month expires. In the (rare) case of a revision we allow four months and in the case of conditional acceptance we allow two months to submit the final version. In both cases we expect a cover letter explaining how you met the requirements. For conditional acceptance the editors will verify that the requirements were met. In the case of revision the original associate editor will do so. If the revision cannot be at least conditionally accepted it is rejected: there is no second revision.
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