Keuschnigg Christian; Nielsen Soren Bo - CESifo GmbH <München> - 2007
exercised when this information becomes
available after the investment is sunk, but before the outcome is realized.
Specifically … information content of the signal. If θ =1, the signal is not informative
and agents cannot update their prior probability ε. In … marginal quality shrinks as (A.11) in the Appendix shows.
Hence, for any given q, a lower information content reduces the …