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Optimal inquiry

Author

Listed:
  • Hu, Tai Wei

    (Department of Economics, University of Bristol)

  • Zapechelnyuk, Andriy

    (School of Economics, University of Edinburgh)

Abstract

A decision maker acquires and processes information about an uncertain state of nature through an inquiry: a contingent sequence of questions ending in a decision. Inquiries are costly, with cost proportional to their length. We characterize optimal inquiries, which determine both which decisions are considered and which are prioritized, in the sense of being reached after fewer questions. We show that optimal inquiries generate endogenous confirmation: relative to the no-cost benchmark, they expand the set of states in which the decision maker chooses the most likely decisions. An optimal inquiry may also treat ex ante symmetric options differently, prioritizing some while deprioritizing or excluding others. To an observer who ignores inquiry costs, these choices may appear biased.

Suggested Citation

  • Hu, Tai Wei & Zapechelnyuk, Andriy, 0. "Optimal inquiry," Theoretical Economics, Econometric Society.
    • Handle: RePEc:the:publsh:6926
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    Keywords

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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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