Original title: Selective sampling with information-storage constraints
Authors: Jehiel, P. ; Steiner, Jakub
Document type: Research reports
Year: 2018
Language: eng
Series: CERGE-EI Working Paper Series, volume: 621
Abstract: A decision-maker acquires payoff-relevant information until she reaches her storing capacity, at\nwhich point she either terminates the decision-making and chooses an action, or discards some\ninformation. By conditioning the probability of termination on the information collected, she\ncontrols the correlation between the payoff state and her terminal action. We provide an\noptimality condition for the emerging stochastic choice. The condition highlights the benefits of\nselective memory applied to the extracted signals. The constrained-optimal choice rule exhibits (i) confirmation bias, (ii) speed-accuracy complementarity, (iii) overweighting of rare events, and (iv) salience effect.
Keywords: bounded rationality; cognitive constraints; information processing

Institution: Economics Institute AS ČR (web)
Document availability information: Fulltext is available at external website.
External URL: https://www.cerge-ei.cz/pdf/wp/Wp621.pdf
Original record: http://hdl.handle.net/11104/0285002

Permalink: http://www.nusl.cz/ntk/nusl-383513


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