Experimental Cost of Information

2022/08/30 by Tommaso Denti, Massimo Marinacci, Mássimo Marinacci +1 · 36 citations
Decision Sciences · Mathematics · Social Sciences · #Computer science #Core (optical fiber) #Decision-Making and Behavioral Economics #Distribution (mathematics) #Econometrics #Economics #Experimental Behavioral Economics Studies #Game Theory and Applications #Mathematical economics #Mathematics

paper · doi:10.1257/aer.20210879

published in American Economic Review 112(9), 3106-3123 (American Economic Association)

openalex publication_date 2022/08/30 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/30

Abstract

We relate two main representations of the cost of acquiring information: a cost that depends on the experiment performed, as in statistical decision theory, and a cost that depends on the distribution of posterior beliefs, as in applications of rational inattention. We show that in many cases of interest, posterior-based costs are inconsistent with a primitive model of costly experimentation. The inconsistency is at the core of known limits to the application of rational inattention in games and, more broadly, in equilibrium analyses where beliefs are endogenous; we show that an experiment-based approach helps to understand and overcome these difficulties. (JEL D82, D83)

Citations

• Costly Persuasion

Cited by

• Posterior-Separable Costs and Menu Preferences
• Rationally Inattentive Statistical Discrimination: Arrow Meets Phelps
• When and what to learn in a changing world
• Convex Cost of Information via Statistical Divergence
• Persuasion under the Threat of Verification
• Attention elasticities and invariant information costs

Related

• Identification with Posterior-Separable Information Costs
• The Cost of Optimally Acquired Information
• Modeling information acquisition via f-divergence and duality
• Posterior-Mean Separable Costs of Information Acquisition
• Robust Predictions in Games with Rational Inattention