The Value of Information in Monotone Decision Problems

Jonathan Levin and Susan Athey

Working Papers from Stanford University, Department of Economics

Abstract: February 2001

This paper studies decision problems under uncertainty where a decision-maker observes an imperfect signal about the true state of the world. We analyze the information preferences and information demand of such decision-makers, based on properties of their payoff functions. We restrict attention to "monotone decision problems," whereby the posterior beliefs induced by the signal can be ordered so that higher actions are chosen in response to higher signal realizations. Monotone decision problems are frequently encountered in economic modeling. We provide necessary and sufficient conditions for all decision makers with different classes of payoff functions to prefer one information structure to another. We also provide conditions under which two decision-makers in a given class can be ranked in terms of their marginal value for information and hence information demand. Applications and examples are given.

Working Papers Index

Date: 2001-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (47)

Downloads: (external link)
http://www-econ.stanford.edu/faculty/workp/swp01003.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www-econ.stanford.edu/faculty/workp/swp01003.pdf [301 Moved Permanently]--> https://www-econ.stanford.edu/faculty/workp/swp01003.pdf [307 Temporary Redirect]--> https://economics.stanford.edu//faculty/workp/swp01003.pdf)

Related works:
Journal Article: The value of information in monotone decision problems (2018)
Working Paper: The Value of Information In Monotone Decision Problems (1998)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wop:stanec:01003

Access Statistics for this paper

More papers in Working Papers from Stanford University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Krichel ().