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The value of information and the value of awareness

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  • John Quiggin

    () (University of Queensland)

Abstract

Abstract Recent literature has examined the problem facing decision makers with bounded awareness, who may be unaware of some states of nature. A question that naturally arises here is whether a value of awareness (VOA), analogous to value of information (VOI), can be attributed to changes in awareness. In this paper, such a value is defined. It is shown that the sum VOA $$+$$ + VOI is constant and, except for scale effects, independent of the choice set. It follows that the larger is VOA, the smaller is VOI. This point is illustrated for a simple two-state case, then proved for general classes of compact convex choice sets, and for alternative interpretations of the concept of unawareness.

Suggested Citation

  • John Quiggin, 2016. "The value of information and the value of awareness," Theory and Decision, Springer, vol. 80(2), pages 167-185, February.
  • Handle: RePEc:kap:theord:v:80:y:2016:i:2:d:10.1007_s11238-015-9496-x
    DOI: 10.1007/s11238-015-9496-x
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    References listed on IDEAS

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    1. repec:eee:ecolet:v:158:y:2017:i:c:p:7-9 is not listed on IDEAS

    More about this item

    Keywords

    Value of information; Awareness;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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