Precision May Harm: The Comparative Statics of Imprecise Judgement

Sean Horan, Paola Manzini and Marco Mariotti

Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ

Abstract: We consider an agent whose information about the objects of choice is imperfect in two respects: first, their values are perceived with error; and, second, the realised values cannot be discriminated with absolute precision . Reasons for imprecise discrimination include limitations in sensory perception, memory function, or the technology that experts use to communicate with decision-makers. We study the effect of increasing precision on the quality of decision-making. When values are perceived without error, more precision is unambiguously beneficial. We show that this ceases to be true when values are perceived with error. As a practical implication, our results establish conditions where it is counter-productive for an expert to use a finer signalling scheme to communicate with a decision-maker.

Keywords: stochastic choice; imprecise perception (search for similar items in EconPapers)
JEL-codes: D01 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2018
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Related works:
Working Paper: Precision may harm: The comparative statics of imprecise judgement (2018)
Working Paper: Precision May Harm: The Comparative Statics of Imprecise Judgement (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:mtl:montec:16-2018

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