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Blackwell-Monotone Information Costs

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  • Xiaoyu Cheng
  • Yonggyun Kim

Abstract

A Blackwell-monotone information cost function assigns higher costs to Blackwell more informative experiments. This paper provides simple necessary and sufficient conditions for a cost function to be Blackwell monotone over finite experiments. The key condition involves a system of linear differential inequalities. By using this characterization, we show that when a cost function is additively separable, it is Blackwell monotone if and only if it is the sum of sublinear functions. This identifies a wide range of practical information cost functions. Finally, we apply our results to bargaining and persuasion problems with costly information, broadening and strengthening earlier findings.

Suggested Citation

  • Xiaoyu Cheng & Yonggyun Kim, 2024. "Blackwell-Monotone Information Costs," Papers 2404.15158, arXiv.org, revised Jul 2024.
    • Handle: RePEc:arx:papers:2404.15158
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    References listed on IDEAS

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    1. Andrew Caplin & Mark Dean & John Leahy, 2022. "Rationally Inattentive Behavior: Characterizing and Generalizing Shannon Entropy," Journal of Political Economy, University of Chicago Press, vol. 130(6), pages 1676-1715.
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