Switching cost models as hypothesis tests

Samuel N. Cohen, Timo Henckel (), Gordon Menzies, Johannes Muhle-Karbe and Daniel Zizzo

Economics Letters, 2019, vol. 175, issue C, 32-35

Abstract: We relate models based on costs of switching beliefs (e.g., due to inattention) to hypothesis tests. Specifically, for an inference problem with a penalty for mistakes and for switching the inferred value, a band of inaction is optimal. We show this band is equivalent to a confidence interval, and therefore to a two-sided hypothesis test.

Keywords: Inference; Switching cost; Inferential expectations; Hypothesis test (search for similar items in EconPapers)
JEL-codes: D01 D81 D84 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Switching Cost Models as Hypothesis Tests (2018)
Working Paper: Switching cost models as hypothesis tests (2018)
Working Paper: Switching Cost Models as Hypothesis Tests (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:175:y:2019:i:c:p:32-35

DOI: 10.1016/j.econlet.2018.11.014

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