Emotional Decision-Makers and Anomalous Attitudes towards Information

Francesca Barigozzi and Rosella Levaggi

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We use a simple version of the Psychological Expected Utility Model (Caplin and Leahy, QJE, 2001) to analyze the optimal choice of information accuracy by an individual who is concerned with anticipatory feeling. The individual faces the following trade-off: on the one hand information may lead to emotional costs, on the other the higher the information accuracy, the higher the efficiency of decision-making. We completely and explicitly characterize how anticipatory utility depends on information accuracy, and study the optimal amount of information acquisition. We obtain simple and explicit conditions under which the individual prefers no-information or partial information gathering. We show that anomalous attitudes towards information can be more articulated than previously thought.

Date: 2009-02
New Economics Papers: this item is included in nep-cbe, nep-cta, nep-neu and nep-upt
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Related works:
Journal Article: Emotional decision-makers and anomalous attitudes towards information (2010)
Working Paper: Emotional Decision-Makers and Anomalous Attitudes towards Information (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:656

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