IDEAS home Printed from https://ideas.repec.org/p/bie/wpaper/689.html
   My bibliography  Save this paper

Strategic Information Selection

Author

Listed:
  • Preker, Jurek

    (Center for Mathematical Economics, Bielefeld University)

  • Karos, Dominik

    (Center for Mathematical Economics, Bielefeld University)

Abstract

Before choosing her action to match the state of the world, an agent observes a stream of messages generated by some unknown binary signal. The agent can either learn the underlying signal for free and update her belief accordingly or ignore the observed message and keep her prior belief. After each period the stream stops with positive probability and the final choice is made. We show that a Markovian agent with Gilboa-Schmeidler preferences learns and updates after confirming messages, but she ignores contradicting messages if her belief is sufficiently strong. Her threshold solely depends on the least precise signal. The agent has strictly higher anticipatory utility than an agent who uses every message to update. However, the latter has a higher chance to choose the correct outcome in the end. In a population of strategic agents, who only differ in their initial beliefs, polarization is inevitable.

Suggested Citation

  • Preker, Jurek & Karos, Dominik, 2024. "Strategic Information Selection," Center for Mathematical Economics Working Papers 689, Center for Mathematical Economics, Bielefeld University.
    • Handle: RePEc:bie:wpaper:689
    as

    Download full text from publisher

    File URL: https://pub.uni-bielefeld.de/download/2988382/2988383
    File Function: First Version, 2024
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bracha, Anat & Brown, Donald J., 2012. "Affective decision making: A theory of optimism bias," Games and Economic Behavior, Elsevier, vol. 75(1), pages 67-80.
    2. Loewenstein, George, 1987. "Anticipation and the Valuation of Delayed Consumption," Economic Journal, Royal Economic Society, vol. 97(387), pages 666-684, September.
    3. Peter Klibanoff & Massimo Marinacci & Sujoy Mukerji, 2005. "A Smooth Model of Decision Making under Ambiguity," Econometrica, Econometric Society, vol. 73(6), pages 1849-1892, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Faruk Gul & Paulo Natenzon & Wolfgang Pesendorfer, 2020. "Random Evolving Lotteries and Intrinsic Preference for Information," Working Papers 2020-71, Princeton University. Economics Department..
    2. Au, Pak Hung, 2016. "Price reaction and disagreement over public signal," Journal of Economic Behavior & Organization, Elsevier, vol. 130(C), pages 81-106.
    3. Coutts, Alexander, 2019. "Testing models of belief bias: An experiment," Games and Economic Behavior, Elsevier, vol. 113(C), pages 549-565.
    4. Fujikawa, Takemi, 2009. "The hot stove effect in repeated-play decision making under ambiguity," MPRA Paper 17647, University Library of Munich, Germany.
    5. Norman Henderson & Ian Bateman, 1995. "Empirical and public choice evidence for hyperbolic social discount rates and the implications for intergenerational discounting," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 5(4), pages 413-423, June.
    6. Hansen, Lars Peter, 2013. "Uncertainty Outside and Inside Economic Models," Nobel Prize in Economics documents 2013-7, Nobel Prize Committee.
    7. Peter John Robinson & W.J.W. Botzen & F. Zhou, 2019. "An experimental study of charity hazard: The effect of risky and ambiguous government compensation on flood insurance demand," Working Papers 19-19, Utrecht School of Economics.
    8. Gajdos, Thibault & Maurin, Eric, 2004. "Unequal uncertainties and uncertain inequalities: an axiomatic approach," Journal of Economic Theory, Elsevier, vol. 116(1), pages 93-118, May.
    9. De Neve, Jan-Emmanuel & Oswald, Andrew J., 2012. "Estimating the influence of life satisfaction and positive affect on later income using sibling fixed-effects," LSE Research Online Documents on Economics 51523, London School of Economics and Political Science, LSE Library.
    10. Karantounias, Anastasios G., 2023. "Doubts about the model and optimal policy," Journal of Economic Theory, Elsevier, vol. 210(C).
    11. Cerreia-Vioglio, Simone & Maccheroni, Fabio & Marinacci, Massimo & Montrucchio, Luigi, 2012. "Probabilistic sophistication, second order stochastic dominance and uncertainty aversion," Journal of Mathematical Economics, Elsevier, vol. 48(5), pages 271-283.
    12. ,, 2014. "Second order beliefs models of choice under imprecise risk: non-additive second order beliefs vs. nonlinear second order utility," Theoretical Economics, Econometric Society, vol. 9(3), September.
    13. James K. Hammitt, 2020. "Valuing mortality risk in the time of COVID-19," Journal of Risk and Uncertainty, Springer, vol. 61(2), pages 129-154, October.
    14. Christian Gollier & James Hammitt & Nicolas Treich, 2013. "Risk and choice: A research saga," Journal of Risk and Uncertainty, Springer, vol. 47(2), pages 129-145, October.
    15. Armantier, Olivier & Treich, Nicolas, 2013. "Eliciting beliefs: Proper scoring rules, incentives, stakes and hedging," European Economic Review, Elsevier, vol. 62(C), pages 17-40.
    16. Baker, Erin & Bosetti, Valentina & Salo, Ahti, 2016. "Finding Common Ground when Experts Disagree: Belief Dominance over Portfolios of Alternatives," MITP: Mitigation, Innovation and Transformation Pathways 243147, Fondazione Eni Enrico Mattei (FEEM).
    17. Jewitt, Ian & Mukerji, Sujoy, 2017. "Ordering ambiguous acts," Journal of Economic Theory, Elsevier, vol. 171(C), pages 213-267.
    18. Philippe Jehiel, 2022. "Analogy-Based Expectation Equilibrium and Related Concepts:Theory, Applications, and Beyond," Working Papers halshs-03735680, HAL.
    19. Hippolyte d’Albis & Emmanuel Thibault, 2018. "Ambiguous life expectancy and the demand for annuities," Theory and Decision, Springer, vol. 85(3), pages 303-319, October.
    20. Mehmet Nar, 2015. "The Effects of Behavioral Economics on Tax Amnesty," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 580-589.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bie:wpaper:689. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bettina Weingarten (email available below). General contact details of provider: https://edirc.repec.org/data/imbiede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.