Examples of asymmetric information in the following topics:
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- Asymmetric information, different information between two parties, leads to the following - adverse selection, moral hazards, and market failure.
- Asymmetric information means that one party has more or better information than the other when making decisions and transactions.
- In addition to adverse selection, moral hazards are also a result of asymmetric information.
- In relation to asymmetric information, moral hazard may occur if one party is insulated from risk and has more information about its actions and intentions than the party paying for the negative consequences of the risk.
- Asymmetric information starts the downward economic spiral for a firm.
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- In corporate finance pecking ordering consideration takes into account the increase in the cost of financing with asymmetric information.
- Pecking order theory basically states that the cost of financing increases with asymmetric information.
- Goyal and Frank show, among other things, that Pecking Order theory fails where it should hold, namely for small firms where information asymmetry is presumably an important problem.
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- Signaling is the conveyance of nonpublic information through public action, and is often used as a technique in capital structure decisions.
- In economics and finance, signaling is the idea that a party may indirectly convey information about itself, which may not be public, through actions to other parties.
- Signaling becomes important in a state of asymmetric information (a deviation from perfect information), which says that in some economic transactions inequalities in access to information upset the normal market for the exchange of goods and services.
- In his seminal 1973 article, Michael Spence proposed that two parties could get around the problem of asymmetric information by having one party send a signal that would reveal some piece of relevant information to the other party.
- In terms of capital structure, management should, and typically does, have more information than an investor, which implies asymmetric information.
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- Governments can intervene to make a market more efficient when a market failure, such as externalities or asymmetric information, exists.
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- A dividend decision may have an information signalling effect that firms will consider in formulating their policy.
- Signaling took root in the idea of asymmetric information, which says that in some economic transactions, inequalities in access to information upset the normal market for the exchange of goods and services .
- When investors have incomplete information about the firm (perhaps due to opaque accounting practices) they will look for other information in actions like the firm's dividend policy.
- Miller and Rock pointed out that this is likely due to the information content of dividends.
- Describe what information a shareholder can obtain from a company issuing dividends
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- Still, it can be rather surprising how much information can be "squeezed out" of a single binary matrix by using basic graph concepts.
- Figure 7.1 shows the di-graph (directed graph) for the Knoke information exchange data:
- If you look closely, you can see that some actor's connections are likely to be reciprocated (that is, if A shares information with B, B also shares information with A); some other actors (e.g. 6 and 10, are more likely to be senders than receivers of information).
- The Knoke data graphed above are shown as an asymmetric adjacency matrix in figure 7.2.
- There are ten rows and columns, the data are binary, and the matrix is asymmetric.
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- For any pair of actors in a directed graph, there are three possible relationships: no ties, an asymmetric tie, or a reciprocated tie.
- The second equation describes the probability that two actors will be connected with an asymmetric relation.
- That is, if ties are not mutual or asymmetric, they must be null.Only the scaling constant "lambda," and no causal parameters enter the third equation.
- Figure 18.27 shows the results of fitting the P1 model to the Knoke binary information network.
- Theta = -1.6882 refers to the effect of the global density of the network on the probability of reciprocated or asymmetric ties between pairs of actors.
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- The "elements" or scores in the cells of the matrix record information about the ties between each pair of actors.
- An adjacency matrix may be "symmetric" or "asymmetric. " Social distance can be either symmetric or asymmetric.
- We can since the ties are measured at the nominal level (that is, the data are binary choice data), we can represent the same information in a matrix that looks like:
- This is an example of an "asymmetric" matrix that represents directed ties (ties that go from a source to a receiver).
- Asymmetric adjacency matrix of the graph shown in figure 5.4.
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- Some theorists feel that there is an equilibrium tendency toward dyadic relationships to be either null or reciprocated, and that asymmetric ties may be unstable.
- A network that has a predominance of null or reciprocated ties over asymmetric connections may be a more "equal" or "stable" network than one with a predominance of asymmetric connections (which might be more of a hierarchy).
- Figure 8.5 shows the results for the Knoke information network.
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- Symmetric division maintains stem cell lines and asymmetric division yields differentiated cells.
- To ensure self-renewal, stem cells undergo two types of cell division: symmetric and asymmetric.
- An asymmetric cell division produces two daughter cells with different cellular fates.
- This mechanism is known as extrinsic asymmetric cell division.
- The term asymmetric cell division usually refers to such intrinsic asymmetric divisions.