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Innovation and information acquisition under time inconsistency and uncertainty

Author

Listed:
  • Sophie Chemarin

    () (CECO - Laboratoire d'économétrie de l'École polytechnique - Polytechnique - X - CNRS - Centre National de la Recherche Scientifique)

  • Caroline Orset

    () (LERNA - Economie des Ressources Naturelles - UT1 - Université Toulouse 1 Capitole - INRA - Institut National de la Recherche Agronomique - CEA - Commissariat à l'énergie atomique et aux énergies alternatives)

Abstract

This paper analyzes the impact of hyperbolic discounting preferences on theagent's information acquisition decision who wants to undertake a potentialdangerous activity for human health or the environment. We find that belowcertain discount rate threshold, an agent prefers ignoring information andcontinuing his project. On the other hand, above this threshold, it is optimal forhim to acquire information, and the investment for acquiring the information isincreasing with the discount rate. We then conclude that hyperbolic discountingpreferences limit the information acquisition. Moreover, we explain that the lackof self-control induced by hyperbolic discounting preferences also restraints theinformation acquisition. Finally, we analyze the efficiency of the strict liabilityrule and the negligence rule to motivate the agent to acquire information.

Suggested Citation

  • Sophie Chemarin & Caroline Orset, 2008. "Innovation and information acquisition under time inconsistency and uncertainty," Working Papers halshs-00226656, HAL.
  • Handle: RePEc:hal:wpaper:halshs-00226656 Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00226656
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    References listed on IDEAS

    as
    1. Juan D. Carrillo & Thomas Mariotti, 2000. "Strategic Ignorance as a Self-Disciplining Device," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 529-544.
    2. Brocas, Isabelle & Carrillo, Juan D., 2000. "The value of information when preferences are dynamically inconsistent," European Economic Review, Elsevier, vol. 44(4-6), pages 1104-1115, May.
    3. Salanie, Francois & Treich, Nicolas, 2006. "Over-savings and hyperbolic discounting," European Economic Review, Elsevier, vol. 50(6), pages 1557-1570, August.
    4. Roland Bénabou & Jean Tirole, 2002. "Self-Confidence and Personal Motivation," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 871-915.
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    Cited by:

    1. Caroline Orset, 2017. "How do travellers respond to health and environmental policies to reduce air pollution?," Working Papers 2017/02, INRA, Economie Publique.

    More about this item

    Keywords

    Innovation; information acquisition; uncertainty; self-control; time inconsistency; liability rules;

    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
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing

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