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Innovation and information acquisition under time inconsistency and uncertainty

Sophie Chemarin and Caroline Orset ()
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Caroline Orset: LERNA - Economie des Ressources Naturelles - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - CEA - Commissariat à l'énergie atomique et aux énergies alternatives

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Abstract: This paper analyzes the impact of hyperbolic discounting preferences on theagent's information acquisition decision who wants to undertake a potentialdangerous activity for human health or the environment. We find that belowcertain discount rate threshold, an agent prefers ignoring information andcontinuing his project. On the other hand, above this threshold, it is optimal forhim to acquire information, and the investment for acquiring the information isincreasing with the discount rate. We then conclude that hyperbolic discountingpreferences limit the information acquisition. Moreover, we explain that the lackof self-control induced by hyperbolic discounting preferences also restraints theinformation acquisition. Finally, we analyze the efficiency of the strict liabilityrule and the negligence rule to motivate the agent to acquire information.

Keywords: Innovation; information acquisition; uncertainty; self-control; time inconsistency; liability rules (search for similar items in EconPapers)
Date: 2008-01-30
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Related works:
Journal Article: Innovation and Information Acquisition under Time Inconsistency and Uncertainty (2011) Downloads
Working Paper: Innovation and information acquisition under time inconsistency and uncertainty (2011) Downloads
Working Paper: Innovation and Information Acquisition Under Time Inconsistency and Uncertainty (2008) Downloads
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