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The value of information under unawareness

The value of information under unawareness
The value of information under unawareness
The value of information is examined in a single-agent environment with unawareness. Although the agent has a correct prior about events he is aware of and has a clear understanding of his available actions and payoffs, his unawareness may lead him to commit information processing errors and to behave suboptimally. As a result, the value of information can be negative, contrasting what is true in the standard model with partitional information and no unawareness. We show that the source of the agent’s suboptimal behavior is that he misunderstands the information revealed by his varying awareness, treating it asymmetrically.
unawareness, value of information, uncertainty, knowledge, bounded perception, awarenes
0022-0531
384-396
Galanis, Spyros
66c2b7af-6f28-4319-be60-787796b4054c
Galanis, Spyros
66c2b7af-6f28-4319-be60-787796b4054c

Galanis, Spyros (2015) The value of information under unawareness. Journal of Economic Theory, 157, 384-396. (doi:10.1016/j.jet.2015.01.015).

Record type: Article

Abstract

The value of information is examined in a single-agent environment with unawareness. Although the agent has a correct prior about events he is aware of and has a clear understanding of his available actions and payoffs, his unawareness may lead him to commit information processing errors and to behave suboptimally. As a result, the value of information can be negative, contrasting what is true in the standard model with partitional information and no unawareness. We show that the source of the agent’s suboptimal behavior is that he misunderstands the information revealed by his varying awareness, treating it asymmetrically.

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Accepted/In Press date: 23 January 2015
e-pub ahead of print date: 28 January 2015
Published date: May 2015
Keywords: unawareness, value of information, uncertainty, knowledge, bounded perception, awarenes
Organisations: Economics

Identifiers

Local EPrints ID: 375126
URI: http://eprints.soton.ac.uk/id/eprint/375126
DOI: doi:10.1016/j.jet.2015.01.015
ISSN: 0022-0531
PURE UUID: 2276e434-8f48-4b95-9efb-6390948098f9
ORCID for Spyros Galanis: ORCID iD orcid.org/0000-0003-4286-7449

Catalogue record

Date deposited: 13 Mar 2015 09:36
Last modified: 14 Mar 2024 19:20

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Author: Spyros Galanis ORCID iD

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