Information Aversion

Andries, Marianne and Haddad, Valentin (2017) Information Aversion. TSE Working Paper, n. 17-779, Toulouse

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Official URL: http://tse-fr.eu/pub/28621

Abstract

We propose a theory of inattention solely based on preferences, absent cognitive limitations or external costs of information. Under disappointment aversion, agents are intrinsically information averse. In a consumption-savings problem, we study how information averse agents cope with their fear of information, to make better decisions: they acquire information at infrequent intervals only, and inattention increases when volatility is high, consistent with the empirical evidence. Adding state-dependent alerts following sharp downturns improves welfare, despite the additional endogenous information costs. Our framework accommodates a broad range of applications, suggesting our approach can explain many observed features of decision under uncertainty.

Item Type: Monograph (Working Paper)
Language: English
Date: March 2017
Place of Publication: Toulouse
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse), TSM Research (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 17 Mar 2017 15:27
Last Modified: 23 May 2019 12:18
OAI ID: oai:tse-fr.eu:28621
URI: http://publications.ut-capitole.fr/id/eprint/23189

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