Posterior-Mean Separable Costs of Information Acquisition

Jeffrey Mensch and Komal Malik

Papers from arXiv.org

Abstract: We analyze a problem of revealed preference given state-dependent stochastic choice data in which the payoff to a decision maker (DM) only depends on their beliefs about posterior means. Often, the DM must also learn about or pay attention to the state; in applied work on this subject, a convenient assumption is that the costs of such learning are linearly dependent in the distribution over posterior means. We provide testable conditions to identify whether this assumption holds. This allows for the use of information design techniques to solve the DM's problem.

Date: 2023-11, Revised 2024-11
New Economics Papers: this item is included in nep-dcm and nep-mic
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