The Cost of Information in Dependence on the Investor Relation to the Risk

• Authors: Simona Hašková
• Languages of publication: EN

Abstracts

EN

The contribution sets simple mathematic models describing and explaining the way of behavior of various types of investors (the private and institutionalized ones). The models come from the cardinal utility theory which is used for explaining the connection between the subjective relationship towards risk and some pathologic phenomenon of finance theory (for example the moral hazard question of institutionalized investors) and takes into account the decision making of both ordinary people and professional investors. A reliable estimate of the economic surroundings where the investment should run contributes significantly to a quality of the particular investment decisions. The article contributes to a quality of the investment decision by the original and primary approach to pricing information that lowers the uncertainty in occurrences of the relevant scenarios of the project’s development. At the conclusion there is shown how the shift of the decision breaking point shapes the amount of the acceptable price of the information.

Keywords

EN

Expected net present value; uncertainty and risk; Shannon entropy; pricing of information

• Publisher: Sciendo
• Journal: Folia Oeconomica Stetinensia
• Year: 2012
• Volume: 11
• Issue: 1
• Pages: 73-85

Dates

published

2012-01-01

online

2013-03-15

Contributors

author

Simona Hašková

• Ing. University of Economics in Prague Faculty of Management Department of Business Management Jarošovská 1117, 377 01 Jindřichův Hradec, Czech Republic

References

• Brealey, R.A., Myers, S.C. & Marcus, A.J. (2011). Fundamentals of Corporate Finance (7th Rev. Ed). United States of America: Mcgraw-hill Education.
• Dvořák, P. (2008). Veřejné finance, fiskální nerovnováha a finanční krize. Praha: C.H. Beck.
• Frank, R.H. (2009). The Return of the Economic Naturalist. London: Virgin Books.
• Hašková, S. (2010). The Fundamentals of Theory and Praxis of Managerial calculations. Dissertation, University of Economics in Prague, FMVŠE, Czech Republic. www.vse.cz/ vskp/21678_Z.
• Jaglom, A.M. & Jaglom, I.M. (1964). Probability and Information. Praha: Nakladatelství ČSAV.
• Kohout, P. (2010). Finance po krizi. Praha: Grada Publishing, a.s.
• Von Neumann, J. & Morgenstern, O. (1953). Theory of Games and Economic Behavior. United States of America: Princeton University Press.
• Varian, H.R. (1992). Microeconomic Analysis (3rd Ed.). United States of America: W.W. Norton & Company, Inc.

Identifiers

DOI

10.2478/v10031-012-0015-8