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On The Relevance Of Irrelevant Information

Author

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  • Alexei Parakhonyak

    (Erasmus University Rotterdam)

Abstract

This paper analyses the role of information in the search process. Ibuild a simple model of a good with two random attributes with somejoint probability distribution. I consider seemingly unimportant changesin this distribution, i.e. changes which neither affect expected utility norits variance. These changes have a great impact on the search behaviour:the customer may start to search the characteristics and buy the goodeven if she did not do so before. The optimal search rule is derived andthe model is generalized to multiple objects.

Suggested Citation

  • Alexei Parakhonyak, 2009. "On The Relevance Of Irrelevant Information," Tinbergen Institute Discussion Papers 09-087/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20090087
    as

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    File URL: https://papers.tinbergen.nl/09087.pdf
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    References listed on IDEAS

    as
    1. Anglin, Paul M, 1990. "Disjoint Search for the Prices of Two Goods Consumed Jointly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(2), pages 383-408, May.
    2. Hey, John D & McKenna, Chris J, 1981. "Consumer Search with Uncertain Product Quality," Journal of Political Economy, University of Chicago Press, vol. 89(1), pages 54-66, February.
    3. Weitzman, Martin L, 1979. "Optimal Search for the Best Alternative," Econometrica, Econometric Society, vol. 47(3), pages 641-654, May.
    4. Carlson, John A. & McAfee, R. Preston, 1984. "Joint search for several goods," Journal of Economic Theory, Elsevier, vol. 32(2), pages 337-345, April.
    5. Kohn, Meir G. & Shavell, Steven, 1974. "The theory of search," Journal of Economic Theory, Elsevier, vol. 9(2), pages 93-123, October.
    6. Burdett, Kenneth & Malueg, David A., 1981. "The theory of search for several goods," Journal of Economic Theory, Elsevier, vol. 24(3), pages 362-376, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Search; Consumer Search; Value of Information;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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