Abstract
Apparently mistaken decisions are ubiquitous. To what extent does this reflect irrationality, as opposed to a rational trade-off between the costs of information acquisition and the expected benefits of learning? We develop a revealed preference test that characterizes all patterns of choice "mistakes" consistent with a general model of optimal costly information acquisition and identify the extent to which information costs can be recovered from choice data. (JEL D11, D81, D83).
Original language | English (US) |
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Pages (from-to) | 2183-2203 |
Number of pages | 21 |
Journal | American Economic Review |
Volume | 105 |
Issue number | 7 |
DOIs | |
State | Published - Jul 1 2015 |
ASJC Scopus subject areas
- Economics and Econometrics