Costly information acquisition and the temporal resolution of uncertainty |
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| Institution: | 1. Department of Economics, Yokohama National University, 79-3 Tokiwadai, Hodogaya-ku, Yokohama 240-8501, Japan;2. Faculty of Economics, Fukuoka University, 8-19-1 Nanakuma, Jonan-ku, Fukuoka 814-0180, Japan;1. LUISS School of European Political Economy, Via di Villa Emiliani 14, 00197 Rome, Italy;2. Sapienza University, Via del Castro Laurenziano, 9, 00161 Rome, Italy;1. Adam Smith Business School, University of Glasgow, Glasgow, G12 8QQ, United Kingdom;2. Department of Quantitative Economics, Maastricht University, P.O. Box 616, NL-6200 MD Maastricht, Netherlands;1. Kent Business School; University of Kent; Kent CT2 7FS, UK;2. Department of Economics; University of Pretoria; Hatfield 0028, South Africa |
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| Abstract: | This paper studies the choice of an individual who acquires information before choosing an action from a set of actions, whose consequences depend on the realization of a state of nature. Information processing can be costly, for example, due to limited attention. We show that the preference of the individual is completely characterized by a preference for early resolution of uncertainty, which becomes indifference when facing degenerate choices. When information acquisition is no longer part of the decision process, the individual is indifferent to the timing of resolution of uncertainty and she behaves according to the subjective learning model of Dillenberger et al. (2014). |
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| Keywords: | Costly information acquisition Menu choice Rational inattention Timing of resolution of uncertainty |
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