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Research at St Andrews

Costly Information Acquisition and Optimal Information Choice

Research output: Working paper

Author(s)

Kemal Ozbek

School/Research organisations

Abstract

This paper studies the problem of costly information acquisition by focusing on the case of linear costs (e.g., rational inattention), and provides a characterization of optimal information using a supporting hyperplane argument. The characterization result is also applied on a pricing problem in a single buyer-seller setting, where the buyer can acquire information before purchasing a risky project from the seller. It is shown that the optimal price should be non-monotonic in the degree of the buyer's cost of information acquisition.
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Details

Original languageEnglish
Number of pages24
Publication statusSubmitted - 2018

    Research areas

  • Information acquisition, non-monotonic pricing, rational inattention, supporting hyperplane

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