2026/03/12 by Benjamin Davies
Decision Sciences · Social Sciences · #Game Theory and Applications #Decision-Making and Behavioral Economics #Experimental Behavioral Economics Studies
paper · pdf · doi:10.1016/j.econlet.2026.113060
A forward-looking agent observes signals of a state that follows a Gaussian AR(1) process. He balances the cost of having imprecise beliefs with the cost of acquiring more precise signals. I characterize his optimal information acquisition policy, and analyze how his steady-state beliefs and costs depend on persistence (the AR(1) parameter) and patience (the agent's discount factor). Higher persistence has a non-monotone effect on belief precision and raises overall costs. Higher patience makes beliefs more precise and lowers overall costs.