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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 question that naturally arises here is whether a value of awareness (VOA), analogous 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 alternative concepts of choice under unawareness.

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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. Halpern, Joseph Y. & Rego, Leandro Chaves, 2008. "Interactive unawareness revisited," Games and Economic Behavior, Elsevier, vol. 62(1), pages 232-262, January.
  2. Martin Meier & Burkhard C. Schipper & Aviad Heifetz, 2009. "Dynamic Unawareness and Rationalizable Behavior," Working Papers 910, University of California, Davis, Department of Economics.
  3. Heifetz, Aviad & Meier, Martin & Schipper, Burkhard C., 2006. "Interactive unawareness," Journal of Economic Theory, Elsevier, vol. 130(1), pages 78-94, September.
  4. Quiggin, John, 1982. "A theory of anticipated utility," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 323-343, December.
  5. Simon Grant & John Quiggin, 2013. "Inductive reasoning about unawareness," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(3), pages 717-755, November.
  6. Itzhak Gilboa & David Schmeidler, 1989. "Maxmin Expected Utility with Non-Unique Prior," Post-Print hal-00753237, HAL.
  7. Chambers,Robert G. & Quiggin,John, 2000. "Uncertainty, Production, Choice, and Agency," Cambridge Books, Cambridge University Press, number 9780521785235, June.
  8. Eddie Dekel & Barton L. Lipman & Aldo Rustichini, 1998. "Standard State-Space Models Preclude Unawareness," Econometrica, Econometric Society, vol. 66(1), pages 159-174, January.
  9. Edi Karni & Marie-Louise Vierø, 2012. ""Reverse Bayesianism": A Choice-Based Theory of Growing Awareness," Economics Working Paper Archive 591, The Johns Hopkins University,Department of Economics.
  10. Mark J Machina, 1982. ""Expected Utility" Analysis without the Independence Axiom," Levine's Working Paper Archive 7650, David K. Levine.
  11. Jing Li, 2008. "A Note on Unawareness and Zero Probability," PIER Working Paper Archive 08-022, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  12. Spyros Galanis, 2011. "Syntactic foundations for unawareness of theorems," Theory and Decision, Springer, vol. 71(4), pages 593-614, October.
  13. Jean-Jacques Laffont, 1989. "The Economics of Uncertainty and Information," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121360.
  14. Chew, Soo Hong, 1983. "A Generalization of the Quasilinear Mean with Applications to the Measurement of Income Inequality and Decision Theory Resolving the Allais Paradox," Econometrica, Econometric Society, vol. 51(4), pages 1065-92, July.
  15. Daniel Ellsberg, 1961. "Risk, Ambiguity, and the Savage Axioms," The Quarterly Journal of Economics, Oxford University Press, vol. 75(4), pages 643-669.
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