Irreversible Failure Reverses the Value of Information

Abstract: We study dynamic games with hidden states and absorbing failure, where belief-driven actions can trigger irreversible collapse. In such environments, equilibria that sustain activity generically operate at the boundary of viability. We show that this geometry endogenously reverses the value of information: greater informational precision increases the probability of collapse on every finite horizon. We formalize this mechanism through a limit-viability criterion, and model opacity as a strategic choice of the information structure via Blackwell garbling. When failure is absorbing, survival values become locally concave in beliefs, implying that transparency destroys equilibrium viability while sufficient opacity restores it. In an extended game where agents choose the information structure ex ante, strictly positive opacity is necessary for equilibrium survival. The results identify irreversible failure--not coordination, misspecification, or ambiguity--as a primitive force generating an endogenous demand for opacity in dynamic games.