Emotional Decision-Makers and Anomalous Attitudes towards Information

Barigozzi, Francesca ; Levaggi, Rosella (2008) Emotional Decision-Makers and Anomalous Attitudes towards Information. Bologna: Dipartimento di Scienze economiche DSE, p. 26. DOI 10.6092/unibo/amsacta/4590. In: Quaderni - Working Paper DSE (656). ISSN 2282-6483.
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Abstract

We use a simple version of the Psychological Expected Utility Model (Caplin and Leahy, QJE, 2001) to analyze the optimal choice of information accuracy by an individual who is concerned with anticipatory feeling. The individual faces the following trade-off: on the one hand information may lead to emotional costs, on the other the higher the information accuracy, the higher the efficiency of decision-making. We completely and explicitly characterize how anticipatory utility depends on information accuracy, and study the optimal amount of information acquisition. We obtain simple and explicit conditions under which the individual prefers no-information or partial information gathering. We show that anomalous attitudes towards information can be more articulated than previously thought.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Barigozzi, Francesca
Levaggi, Rosella
Keywords
Psychological expected utility, Information gathering, Bayesian updating
Subjects
ISSN
2282-6483
DOI
Deposit date
15 Feb 2016 13:07
Last modified
15 Feb 2016 13:07
URI

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