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The value of information under unawareness

Galanis, S. ORCID: 0000-0003-4286-7449 (2015). The value of information under unawareness. Journal of Economic Theory, 157, pp. 384-396. doi: 10.1016/j.jet.2015.01.015

Abstract

The value of information is examined in a single-agent environment with unawareness. Although the agent has a correct prior about events he is aware of and has a clear understanding of his available actions and payoffs, his unawareness may lead him to commit information processing errors and to behave suboptimally. As a result, the value of information can be negative, contrasting what is true in the standard model with partitional information and no unawareness. We show that the source of the agent's suboptimal behavior is that he misunderstands the information revealed by his varying awareness, treating it asymmetrically.

Publication Type: Article
Additional Information: © Elsevier 2015. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
Publisher Keywords: Unawareness, Value of information, Uncertainty, Knowledge, Bounded perception, Awareness
Subjects: H Social Sciences > HB Economic Theory
Departments: School of Arts & Social Sciences > Economics
URI: http://openaccess.city.ac.uk/id/eprint/21336
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