Hennessy publishes in Journal of Economic Behavior & Organization

Professor David Hennessy will have an article published in the forthcoming issue of Journal of Economic Behavior & Organization. Hennessy authored the article "Information as a catalyst for industrialization."

Abstract
Technological innovations in the materials and biological sciences ensure more consistent raw materials as production process inputs while IT improves material attribute discernment. When raw materials of two types are to be sorted, we provide a Bayesian information processing model with three parameters, one each to summarize product consistency, signals to discern raw material attributes, and incentives to correctly categorize materials. Consistency and discernment substitute when mis-categorization costs are symmetric. They can complement when mis-categorization into the prevalent type is heavily penalized. A single commodity market emerges whenever consistency is near 100 % but otherwise two may arise. A Catalyst Effect occurs whereby improvements in materials and biological technologies first increases demand for both discernment and consistency but then eliminates demand for discernment while further boosting demand for consistency.

Information as a catalyst for industrialization
David A. Hennessy
Journal of Economic Behavior & Organization 230(February 2025):106874
doi: 10.1016/j.jebo.2024.106874

(Released January 2025)