Switching Cost Models as Hypothesis Tests
Samuel N. Cohen,
Timo Henckel (),
Gordon D. Menzies,
Johannes Muhle-Karbe and
Additional contact information
Samuel N. Cohen: University of Oxford
Gordon D. Menzies: University of Technology & CAMA
Johannes Muhle-Karbe: Carnegie Mellon University
No 42, Working Paper Series from Economics Discipline Group, UTS Business School, University of Technology, Sydney
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)
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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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