Facoltà di scienze economiche

Adoption and use of new information technology

Alderighi, Marco ; Maggi, Rico

A general result of information theory is that asymmetric information generates agent rents and distortions in production. In this paper, we analyse the impact of asymmetric information on adoption and use of information technology (IT). Depending on the conctracting scheme, different results may occur. We explore the differences between the case of contractible investment and the case of... Plus

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    Summary
    A general result of information theory is that asymmetric information generates agent rents and distortions in production. In this paper, we analyse the impact of asymmetric information on adoption and use of information technology (IT). Depending on the conctracting scheme, different results may occur. We explore the differences between the case of contractible investment and the case of noncontractible investment. Assuming the investement decision (adoption) as a constraint on the maximal level of production (use), the results for a contractible case are similar to the standard results obtained from the incentive theory. On the other hands for the noncontractible case the results are new for this literature and present some important consequences. The focus on IT is justified by two considerations. First, it is possible to assume that principal has not much information about new technological skills of the agent. Second, adoption decision on IT are strongly related with our hypothesis on the investment modelling. The main thesis of the paper is that with IT costs sufficiently low, incomplete information and noncontractible investment, there is on average both over-investment and under-use of IT. This result is useful to shed light on IT productivity paradox.