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Costly Subjective Learning

Author

Listed:
  • Youichiro Higashi

    (Faculty of Economics, Okayama University)

  • Kazuya Hyogo

    (Faculty of Economics, Ryukoku University)

  • Norio Takeoka

    (Department of Economics, Hitotsubashi University)

Abstract

Information acquisition is an important aspect of decision making. Acquiring information is costly, but the cost of information acquisition is not typically observable and hence it is not obvious how it can be measured. Using preference over menus, de Oliveira, Denti, Mihm, and Ozbek [15] provide an axiomatic foundation for the additive costs model of information acquisition. If obtaining signals from experiments is time-consuming, such as in the case of a long-run investment decision, however, costs may be measured as a discount factor or waiting time for acquiring information. We propose a general class of representations which allows for non-additive costs for information acquisition and provide its axiomatic foundation. Furthermore, the discounting costs model is characterized as a special case.

Suggested Citation

  • Youichiro Higashi & Kazuya Hyogo & Norio Takeoka, 2020. "Costly Subjective Learning," KIER Working Papers 1040, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:1040
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    File URL: http://www.kier.kyoto-u.ac.jp/DP/DP1040.pdf
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    References listed on IDEAS

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    1. David Dillenberger & R. Vijay Krishna & Philipp Sadowski, 2020. "Subjective Information Choice Processes," PIER Working Paper Archive 20-021, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    2. Cerreia-Vioglio, S. & Maccheroni, F. & Marinacci, M. & Montrucchio, L., 2011. "Uncertainty averse preferences," Journal of Economic Theory, Elsevier, vol. 146(4), pages 1275-1330, July.
    3. Chambers, Christopher P. & Liu, Ce & Rehbeck, John, 2020. "Costly information acquisition," Journal of Economic Theory, Elsevier, vol. 186(C).
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    5. Dekel, Eddie & Lipman, Barton L & Rustichini, Aldo, 2001. "Representing Preferences with a Unique Subjective State Space," Econometrica, Econometric Society, vol. 69(4), pages 891-934, July.
    6. Jay Lu, 2016. "Random Choice and Private Information," Econometrica, Econometric Society, vol. 84, pages 1983-2027, November.
    7. Simone Cerreia-Vioglio & Fabio Maccheroni & Massimo Marinacci & Luigi Montrucchio, 2011. "Complete Monotone Quasiconcave Duality," Mathematics of Operations Research, INFORMS, vol. 36(2), pages 321-339, May.
    8. Andrew Caplin & Mark Dean, 2015. "Revealed Preference, Rational Inattention, and Costly Information Acquisition," American Economic Review, American Economic Association, vol. 105(7), pages 2183-2203, July.
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    13. Hyogo, Kazuya, 2007. "A subjective model of experimentation," Journal of Economic Theory, Elsevier, vol. 133(1), pages 316-330, March.
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    Cited by:

    1. Aoyama, Tomohito, 2020. "Response time and revealed information structure," Discussion paper series HIAS-E-101, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.

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    More about this item

    Keywords

    costly information acquisition; rational inattention; waiting costs; preference for flexibility; preference over menus.;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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