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Information Projection and Timing Decisions: A Rationale for Second Thoughts

Author

Listed:
  • Kohei Daido

    (Kwansei Gakuin University)

  • Tomoya Tajika

    (Nihon University)

Abstract

This study develops a dynamic model of information projection and explores how it affects timing of actions. An action is observable and available only after the agents' arrival. The value of an action is unknown; however, each agent receives a noisy signal on its value. Without information projection, if no one has taken action until then, the expected value of taking action reduces with the passage of time because inaction is a bad signal. In contrast, under projection bias, because of which the agent mistakenly believes that the other agent's arrival time is close to theirs, the expected action value may increase as time passes. Consequently, the agent has second thoughts; although they decide not to take action when they find the problem, they overturn their initial decision and take action later.

Suggested Citation

  • Kohei Daido & Tomoya Tajika, 2022. "Information Projection and Timing Decisions: A Rationale for Second Thoughts," Discussion Paper Series 238, School of Economics, Kwansei Gakuin University.
    • Handle: RePEc:kgu:wpaper:238
    as

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    References listed on IDEAS

    as
    1. Brunnermeier, Markus K. & Morgan, John, 2010. "Clock games: Theory and experiments," Games and Economic Behavior, Elsevier, vol. 68(2), pages 532-550, March.
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    More about this item

    Keywords

    Delay; Information projection bias; Preemption games; Second thoughts; Social learning;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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