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Value of Partial Information

Author

Listed:
  • Jürgen Eichberger
  • Illia Pasichnichenko

    (University of Sussex)

Abstract

Blackwell’s theorem relates the value of information to the “informativeness†of the information structure. His analysis applies to decision makers who are expected utility maximizers and know the information structure of the decision problem. When decision makers do not know the information structure precisely, the signal generating process and the posterior distributions are often only partially known. This paper studies preferences of decision makers with partial knowledge about signals and posterior probability distributions. The partial information approach allows us to relate the value of information to the decision maker’s attitude towards ambiguity. We introduce a new concept of informativeness based on the centroid and prove a theorem in the spirit of Blackwell. Furthermore, we characterize the value of information in terms of the preference relation over information structures. Depending on ambiguity attitude the value of information may be negative.

Suggested Citation

  • Jürgen Eichberger & Illia Pasichnichenko, 2025. "Value of Partial Information," Working Paper Series 0825, Department of Economics, University of Sussex Business School.
    • Handle: RePEc:sus:susewp:0825
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    References listed on IDEAS

    as
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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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