THE VALUE OF INFORMATION - THE CASE OF SIGNAL-DEPENDENT OPPORTUNITY SETS

We generalize the economic decision problem considered by Blackwell (1 953) in which a decision-maker chooses an action after observing a sig nal correlated to the state of nature. Unlike Blackwell's case where t he feasible set is fixed, in our framework the feasible set of actions depends on the signal and the information system. We argue that such a framework has more significance to economic models. As was demonstra ted by Hirshleifer (1971) in such cases, contrary to Blackwell's well- known result, more information may be disadvantageous. We derive condi tions for this general model which guarantee that more information is beneficial.