Emotional Decision-Makers and Anomalous Attitudes towards Information
AbstractWe use a simple version of the Psychological Expected Utility Model (Caplin and Leahy, QJE, 2001) to analyze the optimal choice of information accuracy by an individual who is concerned with anticipatory feeling. The individual faces the following trade-off: on the one hand information may lead to emotional costs, on the other the higher the information accuracy, the higher the efficiency of decision-making. We completely and explicitly characterize how anticipatory utility depends on information accuracy, and study the optimal amount of information acquisition. We obtain simple and explicit conditions under which the individual prefers no-information or partial information gathering. We show that anomalous attitudes towards information can be more articulated than previously thought.
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Bibliographic InfoPaper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number 656.
Date of creation: Feb 2009
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Other versions of this item:
- Francesca Barigozzi & Rosella Levaggi, 2010. "Emotional decision-makers and anomalous attitudes towards information," Journal of Risk and Uncertainty, Springer, vol. 40(3), pages 255-280, June.
- Francesca Barigozzi & Rosella Levaggi, 2008. "Emotional Decision-Makers and Anomalous Attitudes towards Information," CHILD Working Papers wp02_09, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-05-16 (All new papers)
- NEP-CBE-2009-05-16 (Cognitive & Behavioural Economics)
- NEP-CTA-2009-05-16 (Contract Theory & Applications)
- NEP-NEU-2009-05-16 (Neuroeconomics)
- NEP-UPT-2009-05-16 (Utility Models & Prospect Theory)
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