Abstract
The question in which we are interested is how a market inhabited by multiple
agents, about whom we are differentially uncertain, and who trade goods the use of
which imposes a negative effect on others, is to be ideally regulated. We show that a priori asymmetric uncertainty, when combined with a posteriori observed outcomes, is a rich source of information that can be used to reduce aggregate uncertainty. The observation implies that whereas asymmetric information usually entails a cost on welfare, it can help achieve greater efficiency in regulation.
agents, about whom we are differentially uncertain, and who trade goods the use of
which imposes a negative effect on others, is to be ideally regulated. We show that a priori asymmetric uncertainty, when combined with a posteriori observed outcomes, is a rich source of information that can be used to reduce aggregate uncertainty. The observation implies that whereas asymmetric information usually entails a cost on welfare, it can help achieve greater efficiency in regulation.
| Original language | English |
|---|---|
| Place of Publication | Tilburg |
| Publisher | CentER, Center for Economic Research |
| Number of pages | 22 |
| Volume | 2019-001 |
| Publication status | Published - 10 Jan 2019 |
Publication series
| Name | CentER Discussion Paper |
|---|---|
| Volume | 2019-001 |
Keywords
- asymmetric information
- regulatory instruments
- policy updating
- asymmetric uncerntainty
- decison making under uncertainty