On Value Of Information In The Commodity Market And The Financial Market

This study researched value of information in two typical markets: the value of perfect information in the commodity market where different states of commodities can be identified and priced, and the value of imperfect information of investment advice in the financial market. The difference between expected profits through trade or investment with and without certain information defines its value.Uniformed model for these two markets were set up at first. Then diverse increments of profit of both counter parties were deduced under particular circumstances. Base on several normal statistical assumptions, total objective value of information was obtained later on. In the commodity market, the objective value of information is in proportion to the amount and the spread of commodities in disparate states, while is not correlated to differentiated bargainers as subjective value does. Similarly, in the financial market, the objective value of information is a function of the distributions of the population, the preset yields and the amount of money of investors, besides of the length of the investment period, the process for the security price and the preset yield of the analyst, while is not correlated to the particular investors'personal preset yields as the subjective value does. The last part of this paper discussed the situations about some typical applicative commodity markets and the optimal investment strategy in the financial market.