Costly Information Acquisition and Optimal Information Choice
Costly Information Acquisition and Optimal Information Choice
This paper studies the problem of costly information acquisition by focusing on the case of linear costs (e.g., rational inattention), and provides a characterization of optimal information using a supporting hyperplane argument. The characterization result is also applied on a pricing problem in a single buyer-seller setting, where the buyer can acquire information before purchasing a risky project from the seller. It is shown that the optimal price should be non-monotonic in the degree of the buyer's cost of information acquisition.
Ozbek, Kemal
e7edfcf5-cb17-4e64-bfa4-30fb527d2e46
1 May 2018
Ozbek, Kemal
e7edfcf5-cb17-4e64-bfa4-30fb527d2e46
Ozbek, Kemal
(2018)
Costly Information Acquisition and Optimal Information Choice
24pp.
Record type:
Monograph
(Working Paper)
Abstract
This paper studies the problem of costly information acquisition by focusing on the case of linear costs (e.g., rational inattention), and provides a characterization of optimal information using a supporting hyperplane argument. The characterization result is also applied on a pricing problem in a single buyer-seller setting, where the buyer can acquire information before purchasing a risky project from the seller. It is shown that the optimal price should be non-monotonic in the degree of the buyer's cost of information acquisition.
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Published date: 1 May 2018
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Local EPrints ID: 458016
URI: http://eprints.soton.ac.uk/id/eprint/458016
PURE UUID: 6b8e27f3-8e2a-4541-8dee-fbd8ca1a177a
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Date deposited: 24 Jun 2022 17:34
Last modified: 17 Mar 2024 03:59
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