Abstract
The literature overview presented in Chap. 1 demonstrates that there is a very close mathematical correspondence between a complete-information and an incomplete-information economy. Although this insight clearly specifies a methodology by which an incomplete information economy can be analyzed, Chap. 1 left the question of the actual impact of incomplete information on the economy open. This chapter is concerned with this issue and addresses the following questions:
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How does the quality of agents’ information influence their utility? Does better information always mean higher expected lifetime utility?
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How does the quality of information influence share prices and interest rates? Is it the case that better information leads to higher asset prices?
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© 2003 Springer-Verlag Berlin Heidelberg
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Ziegler, A. (2003). The Impact of Incomplete Information on Utility, Prices, and Interest Rates. In: Incomplete Information and Heterogeneous Beliefs in Continuous-time Finance. Springer Finance. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-24755-5_2
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DOI: https://doi.org/10.1007/978-3-540-24755-5_2
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-05567-6
Online ISBN: 978-3-540-24755-5
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