The value of information and the value of awareness
AbstractRecent literature has examined the problem facing decisionmakers with bounded awareness, who may be unaware of some states of nature. A ques- tion that naturally arises here is whether a value of awareness (VOA), anal- ogous to VOI, can be attributed to changes in awareness.In this note it is shown, in a sense that will be made precise, that the sum VOA+VOI is constant and independent of the choice set. It follows that, the greater is VOA, the less is VOI. This point is illustrated for a simple two-state case, then proved for general classes of choice sets. The analysis is then extended to cover altenative concepts of choice under unawareness.
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Bibliographic InfoPaper provided by University of Queensland, School of Economics in its series Risk and Sustainable Management Group Working Papers with number 151207.
Date of creation: 16 Jan 2013
Date of revision:
value of information; awareness; Industrial Organization; D8;
Find related papers by JEL classification:
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-05 (All new papers)
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