Information Aversion

Marianne Andries and Valentin Haddad

No 17-779, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We propose a theory of inattention solely based on preferences, absent cognitive limitations or external costs of information. Under disappointment aversion, agents are intrinsically information averse. In a consumption-savings problem, we study how information averse agents cope with their fear of information, to make better decisions: they acquire information at infrequent intervals only, and inattention increases when volatility is high, consistent with the empirical evidence. Adding state-dependent alerts following sharp downturns improves welfare, despite the additional endogenous information costs. Our framework accommodates a broad range of applications, suggesting our approach can explain many observed features of decision under uncertainty.

Date: 2017-03
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-mic, nep-neu and nep-upt
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Information Aversion (2020)
Working Paper: Information Aversion (2020)
Working Paper: Information Aversion (2017)
Working Paper: Information Aversion (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:28621

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