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The value of information and the value of awareness

  • Quiggin, John

Recent literature has examined the problem facing decisionmakers with bounded awareness, who may be unaware of some states of nature. A ques- tion that naturally arises here is whether a value of awareness (VOA), anal- ogous to VOI, can be attributed to changes in awareness.In this note it is shown, in a sense that will be made precise, that the sum VOA+VOI is constant and independent of the choice set. It follows that, the greater is VOA, the less is VOI. This point is illustrated for a simple two-state case, then proved for general classes of choice sets. The analysis is then extended to cover altenative concepts of choice under unawareness.

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File URL: http://purl.umn.edu/151207
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Paper provided by University of Queensland, School of Economics in its series Risk and Sustainable Management Group Working Papers with number 151207.

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Date of creation: 16 Jan 2013
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Handle: RePEc:ags:uqsers:151207
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  1. Edi Karni & Marie-Louise Vier?, 2013. ""Reverse Bayesianism": A Choice-Based Theory of Growing Awareness," American Economic Review, American Economic Association, vol. 103(7), pages 2790-2810, December.
  2. Simon Grant & John Quiggin, 2013. "Inductive reasoning about unawareness," Economic Theory, Springer, vol. 54(3), pages 717-755, November.
  3. Heifetz, Aviad & Meier, Martin & Schipper, Burkhard C., 2005. "Interactive Unawareness," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 52, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  4. Halpern, Joseph Y. & Rego, Leandro Chaves, 2008. "Interactive unawareness revisited," Games and Economic Behavior, Elsevier, vol. 62(1), pages 232-262, January.
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