Best Paper - Volume 1
The D. P. Jacobs Prize for the most significant paper in the inaugural volume of the
Journal of Financial Intermediation has been awarded to Franklin Allen
for "The Market for Information and the Origin of Financial
Intermediation" published in Volume 1, Issue 1. The prize carries with it a
$5,000 check for the winner.
The Market for Information and the Origin of Financial Intermediation
Franklin Allen
The Wharton School, University of Pennsylvania, Philadelphia, PA 19104
Abstract
When
information is sold, there is often a reliability problem since anyone can claim
to have superior knowledge. Optimal strategies which allow a seller to establish
that he is informed are considered in a standard one-period, two-asset model.
When risk aversion is unobservable, an information market is viable and cannot
obtain the full value of his information because of the reliability problem.
This provides an opportunity for intermediation since an intermediary may be
able to capture some of the remaining value. Journal of Economic Literature
Classification Numbers: 020, 310, 520. ©1990 Academic Press, Inc
