consumption and information: a decision theoretic approach

Blaas, Wolfgang R. and Haslinger, Franz (November 1972) consumption and information: a decision theoretic approach. Forschungsberichte / Research Memoranda 72

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abstract (introduction): the problem of information has been studied up to now only to a small extent in economic theory. exceptions are for example stigler's work which discusses the uncertainty of buyers with respect to the prices of goods, marschak's paper whose topic is the selection of an optimal information system and arrow's attempt to determine the value and the demand for information. the present contribution includes one more attempt in order to generalize the neoclassical models to models with risk and incomplete information. the main topic is the development of a buyer's decision model which allows the derivation of some kind of an individual demand function for information. for didactical purposes the model will first developed under conditions of complete confidence into the information medium (chapter 2) - and then the more genral model - given partial confidence (chapter 4). one can easily characterize the topic by two questions: a) how much money should a "rational" individual invest in information and b) which medium of information should the buyer consult. in order to solve these problems the individual has to use all his past information to estimate the possible gain of information and the utility of the future decision which is influenced by the information obtained. for this question it is irrelevant whether his knowledge about the reality is correct or objectively false. what counts is the fact that the individual acts as if it had knowledge about reality. in chapter 3 an example is constructed to present some insights into the decision process, while in the last two chapters the conclusions and suggestions for extending the model are discussed.;

Item Type: IHS Series
Status: Published
Date Deposited: 26 Sep 2014 10:34
Last Modified: 01 Apr 2016 14:07
URI: http://irihs.ihs.ac.at/id/eprint/72

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