Switching Cost Models as Hypothesis Tests

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

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: 12 pages
Date: 2018-08-27
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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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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