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Information Acquisition and Choice Under Uncertainty

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  • Isabelle Brocas
  • Juan D. Carrillo

Abstract

"This paper presents a model where individuals have imperfect information and there is an opportunity cost of learning. It shows that the endogenous decision to collect costly information before taking an action has a systematic effect on choices. More precisely, consider two alternatives with ex ante identical expected payoff but different variances. The model predicts that, after the learning process is stopped, a majority of individuals will select the alternative with largest payoff-variance. The result persists when agents have multiple sources of information. Applications to entrepreneurial investments, composition of advisory committees, and judicial decision-making are discussed." Copyright (c) 2009, The Author(s) Journal Compilation (c) 2009 Wiley Periodicals, Inc..

Suggested Citation

  • Isabelle Brocas & Juan D. Carrillo, 2009. "Information Acquisition and Choice Under Uncertainty," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(2), pages 423-455, June.
  • Handle: RePEc:bla:jemstr:v:18:y:2009:i:2:p:423-455
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    Cited by:

    1. Kylymnyuk, Dmytro & Wagner, Alexander K., 2012. "Commitment through risk," Economics Letters, Elsevier, vol. 116(3), pages 295-297.
    2. Francesco Sobbrio, 2012. "A Citizen-Editors Model of News Media," RSCAS Working Papers 2012/61, European University Institute.
    3. repec:bla:ecinqu:v:55:y:2017:i:1:p:451-460 is not listed on IDEAS
    4. repec:ctc:serie1:def5 is not listed on IDEAS

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