This is Tom Fiddaman's Typepad Profile.
Join Typepad and start following Tom Fiddaman's activity
Join Now!
Already a member? Sign In
Tom Fiddaman
Recent Activity
Isn't this an incomplete characterization of the quote, because U and WTP accrue to different agents? Or are you assuming that industry WTP reflects a complete and enforceable liability for public U? If so, it would seem that this WTP is normative, i.e. what shareholders ought to be willing to pay if they knew the objective p and q, q' on the rhs. That could differ a lot from actual WTP if perceptions of the distribution are wrong, or principal-agent problems within the firm lead managers to take greater risks than shareholders would prefer.
1 reply
Isn't this an incomplete characterization of the quote, because U and WTP accrue to different agents? Or are you assuming that industry WTP reflects a complete and enforceable liability for public U? If so, it would seem that this WTP is normative, i.e. what shareholders ought to be willing to pay if they knew the objective p and q, q' on the rhs. That could differ a lot from actual WTP if perceptions of the distribution are wrong, or principal-agent problems within the firm lead managers to take greater risks than shareholders would prefer.
1 reply
Tom Fiddaman is now following The Typepad Team
May 12, 2010