The Cost of Information: The Case of Constant Marginal Costs

Luciano Pomatto, Philipp Strack () and Omer Tamuz

Papers from arXiv.org

Abstract: We develop an axiomatic theory of information acquisition that captures the idea of constant marginal costs in information production: the cost of generating two independent signals is the sum of their costs, and generating a signal with probability half costs half its original cost. Together with Blackwell monotonicity and a continuity condition, these axioms determine the cost of a signal up to a vector of parameters. These parameters have a clear economic interpretation and determine the difficulty of distinguishing states.

Date: 2018-12, Revised 2023-02
New Economics Papers: this item is included in nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1812.04211

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