When can it make sense to throw away payoffs?

Felix Höffler ()

No 09-01, WHU Working Paper Series - Economics Group from WHU - Otto Beisheim School of Management

Abstract: We investigate when destroying payoff can be beneficial in a learning process of a boundedly rational, risk averse agent. Destroying payoff reduces average returns but can - as a "self punishment" - accelerarte learning. This smoothens payoffs and can thereby increase expected utility.

Keywords: Bounded rationality; Learning; Sunk costs (search for similar items in EconPapers)
JEL-codes: C73 D81 D83 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2009-07-21
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