Information Revelation and Certification Intermediaries

1999 ◽  
Vol 30 (2) ◽  
pp. 214 ◽  
Author(s):  
Alessandro Lizzeri
Keyword(s):  
Information Revelation ◽  
Certification Intermediaries

Informational Efficiency and Liquidity Premium as the Determinants of Capital Structure

2010 ◽  
Vol 45 (2) ◽  
pp. 401-440 ◽  
Author(s):  
Chun Chang ◽  
Xiaoyun Yu
Keyword(s):  
Capital Structure ◽  
Information Acquisition ◽  
Operating Efficiency ◽  
Informational Efficiency ◽  
Information Revelation ◽  
Security Prices ◽  
Liquidity Premium ◽  
Maximum Information ◽  
Informed Traders ◽  
Operating Decisions

AbstractThis paper investigates how a firm’s capital structure choice affects the informational efficiency of its security prices in the secondary markets. We identify two new determinants of a firm’s capital structure policy: the liquidity (adverse selection) premium due to investors’ anticipated losses to informed trading, and operating efficiency improvement due to information revelation from the firm’s security prices. We show that the capital structure decision affects traders’ incentives to acquire information and subsequently, the distribution of informed traders across debt and equity claims. When information is less imperative for improving its operating decisions, a firm issues zero or negative debt (i.e., holding excess cash reserves) in order to reduce socially wasteful information acquisition and the liquidity premium associated with it. When information is crucial for a firm’s operating decisions, the optimal debt level is one that achieves maximum information revelation at the lowest possible liquidity cost. Our model can explain why many firms consistently hold no debt. It also provides new implications for financial system design and for the relationship among leverage, liquidity premium, profitability, and the cost of information acquisition.

scholarly journals Information Shaping for Enhanced Goal Recognition of Partially-Informed Agents

2020 ◽  
Vol 34 (06) ◽  
pp. 9908-9915
Author(s):  
Sarah Keren ◽  
Haifeng Xu ◽  
Kofi Kwapong ◽  
David Parkes ◽  
Barbara Grosz
Keyword(s):  
Incomplete Information ◽  
Recognition Task ◽  
Search Space ◽  
Perfect Information ◽  
Suggested Method ◽  
Information Revelation ◽  
Goal Recognition ◽  
Effectiveness And Efficiency

We extend goal recognition design to account for partially informed agents. In particular, we consider a two-agent setting in which one agent, the actor, seeks to achieve a goal but has only incomplete information about the environment. The second agent, the recognizer, has perfect information and aims to recognize the actor's goal from its behavior as quickly as possible. As a one-time offline intervention and with the objective of facilitating the recognition task, the recognizer can selectively reveal information to the actor. The problem of selecting which information to reveal, which we call information shaping, is challenging not only because the space of information shaping options may be large, but also because more information revelation need not make it easier to recognize an agent's goal. We formally define this problem, and suggest a pruning approach for efficiently searching the search space. We demonstrate the effectiveness and efficiency of the suggested method on standard benchmarks.

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