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Costly information acquisition and the temporal resolution of uncertainty

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  • Pennesi, Daniele

Abstract

This paper studies the choice of an individual who acquires information before choosing an action from a set of actions, whose consequences depend on the realization of a state of nature. Information processing can be costly, for example, due to limited attention. We show that the preference of the individual is completely characterized by a preference for early resolution of uncertainty, which becomes indifference when facing degenerate choices. When information acquisition is no longer part of the decision process, the individual is indifferent to the timing of resolution of uncertainty and she behaves according to the subjective learning model of Dillenberger et al. (2014).

Suggested Citation

  • Pennesi, Daniele, 2015. "Costly information acquisition and the temporal resolution of uncertainty," Journal of Mathematical Economics, Elsevier, vol. 60(C), pages 115-122.
  • Handle: RePEc:eee:mateco:v:60:y:2015:i:c:p:115-122
    DOI: 10.1016/j.jmateco.2015.07.005
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    Cited by:

    1. D. Pennesi, 2016. "When perfectionism becomes willpower," Working Papers wp1050, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Daniele Pennesi, 2020. "Identity and information acquisition," Carlo Alberto Notebooks 610, Collegio Carlo Alberto, revised 2021.
    3. Daniele Pennesi, 2018. "Perfectionism and willpower," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 6(1), pages 101-110, April.
    4. Daniele Pennesi, 2021. "Between Commitment and Flexibility: Revealing Anticipated Regret and Elation," Working papers 071, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.

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    More about this item

    Keywords

    Costly information acquisition; Menu choice; Rational inattention; Timing of resolution of uncertainty;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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