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The value of information and the value of awareness

Listed author(s):
  • John Quiggin

    ()

    (University of Queensland)

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.

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Article provided by Springer in its journal Theory and Decision.

Volume (Year): 80 (2016)
Issue (Month): 2 (February)
Pages: 167-185

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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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