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The Demand for Information and the Distribution of Income

  • Kenneth J. Arrow (a1)
Abstract

Investors can increase their payoff by acquiring information on rates of return. The value of the information is greater, the greater the amount to be invested. Therefore, information purchased and consequently the expected rate of return increases with initial wealth, and the distribution of final wealth is more unequal than that of initial wealth.

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Arrow, K. J. (1965). Aspects of the Theory of Risk-Bearing, Helsinki: Yrjö Jahnssonin säätio.
Arrow, K. J. (1971). Essays in the Theory of Risk-Bearing. Amsterdam: North-Holland, p. 6365, 110111.
Becker, G. S. (1967). Human Capital and the Personal Distribution of Income: An Analytical Approach. Ann Arbor, Michigan: Institute of Public Administration, University of Michigan.
Menger, K. (1934). Das Unsicherheitsmoment in der Wertlehre. Zeitschrift für Nationalökonomie 51: 439485.
Pratt, J. W. (1964). Risk aversion in the small and in the large. Econometrica 32: 122136.
Yitzakhi, S. [forthcoming] On the relation between return and income. Quarterly Journal of Economics.
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Probability in the Engineering and Informational Sciences
  • ISSN: 0269-9648
  • EISSN: 1469-8951
  • URL: /core/journals/probability-in-the-engineering-and-informational-sciences
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