Effects Of Incomplete Information Research Articles

Effects of incomplete information on risk management

Recent research shows that while the creditors’ interests determine an issuer’s hedging policy, creditors observe incomplete information regarding the cash flow. This study examines hedging effects with incomplete information through a real-option model, thereby deriving associated implications. We show that the difference in firm values between hedged and unhedged policies increases with more incomplete information. The higher the hedging efficiency, the larger the difference in hedging values across the degrees of incomplete information. The hedging effect decreases with shareholders’ bargaining power in renegotiations. Our findings imply that creditors are more likely to impose hedging requirements when facing more incomplete information.

Estimates of carbon dioxide emissions based on incomplete condition information: a case study of liquefied natural gas in China

Recent calculations of carbon dioxide (CO2) emissions have faced challenges because data consist of only partial information, which is called "incomplete information." According to the emission factor method, energy consumption and CO2 emission factors with incomplete information may lead to unmatched multiplication between themselves, which affects accuracy and increases uncertainties in emission results. To address a specific case of incomplete information that has not been fully explored, we studied the effects of incomplete condition information on the estimates of CO2 emissions from liquefied natural gas (LNG) in China. Based on Chinese LNG sampling data, we obtained the specific-country CO2 emission factor for LNG in China and calculated the corresponding CO2 emissions. By applying hypothesis testing, regression analysis, variance analysis, or Monte Carlo (MC) simulations, the effects of incomplete information on the uncertainty of CO2 emission calculations in three cases were analyzed. The results indicate that calorific values have more than a 9.8% impact on CO2 emission factors and CO2 emissions with incomplete sample information. Regarding incomplete statistical information, the impact of statistical temperature on CO2 emissions exceeds 5.5%. Regarding incomplete sample and statistical information, sample and statistical temperatures can individually increase estimate biases by more than 5.2%. Significantly, the impacts of sample temperature and statistical temperature may offset each other. Therefore, the incomplete condition information is quite important and cannot be ignored in the estimation of CO2 emissions from LNG and international fair comparison.

Effects of Incomplete Information on the Detection of Concealed Crime Details

The accuracy of the Concealed Information Test in correct classification of informed guilty and informed innocent participants was assessed when the explicitness of the obtained information varied. For these purposes, a mock crime procedure was employed and participants were randomly assigned to six conditions formed by combinations of two levels of the state of guilt (guilty and innocent) and three levels of information completeness (exact, indicative, non-specific). As expected, informed guilty participants were more accurately detected than informed innocents. It was further found that when the gathered information was less explicit, detection efficiency decreased. Theoretical and practical implications of the present results are discussed.

Learning about Investment Risk: The Effects of Structural Uncertainty on Dynamic Investment and Consumption

This paper examines the effects of incomplete information on dynamic investment and consumption in a general equilibrium model where shocks to capital are unobservable and there is structural or parameter uncertainty regarding the volatility of these shocks; i.e., the investment risk. In this model higher investment reduces the estimation error on the unobservable state variables, and thereby also reduces the estimation error on the unknown parameter. Investment policy therefore affects the speed of learning and is itself subsequently affected as estimation errors fall over time. We quantify the interaction of learning with investment by numerically computing equilibrium investment and consumption in a version of the model calibrated by aggregate US data. We find that imperfect observability (of productivity shocks) by itself does not significantly affect equilibrium investment and consumption. The introduction of structural or parameter uncertainty has significant effects on equilibrium investment and consumption, however. Moreover, investment and consumption levels in the presence of structural uncertainty are more quantitatively consistent with the data when compared to versions of the model that assume either complete information or incomplete information without structural uncertainty. The presence of structural uncertainty also appears to make consumption growth more volatile compared to the benchmark cases. Finally, and consistent with the theoretical analysis, the marginal propensity to invest is not monotone increasing with time even though the estimation errors are being reduced due to learning.

Third-party intervention and escalation in Kosovo: Does moral hazard explain it?

ABSTRACT This piece provides a critique of the moral-hazard theory of third-party interventions. While the author agrees with the proponents of the theory that threats of intervention may have radicalizing effects on a minority's behaviour by reducing its risks in carrying out violence, he argues that this is an incomplete causal argument, if what we are trying to explain is escalated violence and not just minority radicalization. This criticism is based on two claims in particular. First, if the minority and the state observe the same third-party threat, they should both adjust their bargaining calculations. This means that such threats should affect the terms of settlement, and not the likelihood of violence. Second, he argues that cases where the minority radicalization results from explicit or implicit encouragement by third parties should not count as evidence supporting the moral-hazard theory. An internally consistent moral-hazard account requires an explanation of why third parties were unable to make their threats of intervention conditional on the minority's responsible behaviour. The piece also provides an alternative, informal analysis of escalated violence in response to third-party interventions focusing on the effects of incomplete information regarding the target-state's and the third party's preferences over a set of outcomes. The author uses evidence from Kosovo to compare the two arguments.

Demand and supply of forward exchange contracts under incomplete information

This article derives a complete set of demand and supply functions for forward exchange contracts in a multiperiod economy under incomplete information. Investors can invest in domestic and foreign risky securities; they consume foreign as well as domestic goods that have stochastic prices. Because the aggregate exposure to exchange risk may be different from zero and because investors may have heterogeneous expectations, they take speculative positions. The central theme of the article is an analysis of the role of forward exchange contracts and the effects of incomplete information in the optimal allocation of exchange risk.

The effects of incomplete information on the formation of attitudes toward behavioral alternatives.

The effects of incomplete information on the formation of attitudes toward behavioral alternatives.

Private incentives in social dilemmas: The effects of incomplete information and altruism

This paper analyzes the provision of discrete public goods when individuals have altruistic preferences which others do not precisely know. The problem is formulated and solved as a Bayesian game. In contrast to standard social psychological approaches, based on such natural language terms as greed, fear, and trust, the Bayesian approach provides a rigorous mathematical treatment of social participation. This theory is shown to make strong testable predictions that can integrate data collected across a wide variety of natural and experimental settings. The altruism model is shown to be supported by existing experimental data on binary voluntary contribution games.

The effects of incomplete information on the formation of attitudes toward behavioral alternatives.

The effects of incomplete information on the formation of attitudes toward behavioral alternatives.