Asymmetric Information Drives Cooperative Overinvestment, Reshaping Property Rights
The article explores what happens when people have different information during business deals. It looks at how this affects investment choices and who gets ownership rights. The study found that in situations where one person knows more than the other, it can lead to too much cooperation and overinvestment. This can be good for society but not always for individuals. The research also highlighted the importance of ownership rules and showed how they influence post-deal negotiations. The study identified a new role for option contracts in these scenarios, showing how they can be helpful.