TY  - JOUR
AU  - Drazen,Allan
AU  - Sakellaris,Plutarchos
TI  - News About News:  Information Arrival and Irreversible Investment
JF  - National Bureau of Economic Research Technical Working Paper Series
VL  - No. 244
PY  - 1999
Y2  - August 1999
UR  - http://www.nber.org/papers/t0244
L1  - http://www.nber.org/papers/t0244.pdf
N1  - Author contact info:
Allan Drazen
Department of Economics
University of Maryland
College Park, MD 20742
Tel: 301/405-3477
Fax: 301/405-7835
E-Mail: drazen@econ.umd.edu

Plutarchos Sakellaris
Council of Economic Advisors
Ministry of Economics and Finance
5-7 Nikis Str
101 80 Athens GREECE
Tel: +30 210 33 32 521, fax +30 33 32 527
E-Mail: plutarch@aueb.gr
AB  - We analyze how uncertainty about when information about future returns to a project may be revealed affects investment.  While 'good news' about future returns boosts investment, 'good news about news' (that is news that information may arrive sooner) is shown to depress investment.  We show that early revelation increases the value of an irreversible investment project to a risk-neutral investor.  We relate our results on preference for early revelation to results in non-expected utility theory.  Our framework allows us to study irreversible investment projects whose value has a time-variable volatility.  We also consider how heterogeneity of revelation information across firms may induce a better-informed firm to share its information with competitors.
ER  -