Experimental Cost of Information

Tommaso Denti, Massimo Marinacci and Aldo Rustichini

No 657, Working Papers from IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University

Abstract: We relate two representations of the cost of acquiring information: a cost that depends on the experiment performed, as in statistical decision theory, and a cost that depends on the distribution of posterior beliefs, as in the theory of rational inattention. In many cases of interests, the two representations prove to be inconsistent with each other. We provide a systematic analysis of the inconsistency, propose a way around it, and apply our findings to information acquisition in games.

Date: 2019
New Economics Papers: this item is included in nep-exp, nep-mic and nep-upt
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Journal Article: Experimental Cost of Information (2022)
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