Switching cost models as hypothesis tests

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

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

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)
Pages: 14 pages
Date: 2018-09
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Citations: View citations in EconPapers (2)

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https://cama.crawford.anu.edu.au/sites/default/fil ... e-karbe_zizzo_v1.pdf (application/pdf)

Related works:
Journal Article: Switching cost models as hypothesis tests (2019)
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:een:camaaa:2018-40

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