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

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

Open Access
|Mar 2013

Abstract

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.

DOI: https://doi.org/10.2478/v10031-012-0015-8 | Journal eISSN: 1898-0198 | Journal ISSN: 1730-4237
Language: English
Page range: 73 - 85
Published on: Mar 15, 2013
Published by: University of Szczecin
In partnership with: Paradigm Publishing Services
Publication frequency: 2 issues per year

© 2013 Simona Hašková, published by University of Szczecin
This work is licensed under the Creative Commons License.