The Value of Information Under Unawareness

Spyros Galanis
2015 Social Science Research Network  
The value of information is examined in a single-agent environment with unawareness. Although the agent has a correct prior about events he is aware of and has a clear understanding of his available actions and payoffs, his unawareness may lead him to commit information processing errors and to behave suboptimally. As a result, the value of information can be negative, contrasting what is true in the standard model with partitional information and no unawareness. We show that the source of the
more » ... the source of the agent's suboptimal behavior is that he misunderstands the information revealed by his varying awareness, treating it asymmetrically. JEL-Classifications: C70, D01, D80, D82.
doi:10.2139/ssrn.3117975 fatcat:m3zz5qhdn5fp7owg43xilzgvh4