Information Processing and Limited Liability
Decision-makers often face limited liability and thus know that their loss will be bounded. We study how limited liability affects the behavior of an agent who chooses how much information to acquire and process in order to take a good decision. We find that an agent facing limited liability processes less information than an agent with unlimited liability. The informational gap between the two agents is larger in bad times than in good times and when information is more costly to process.
Year of publication: |
2012
|
---|---|
Authors: | Mackowiak, Bartosz ; Wiederholt, Mirko |
Published in: |
American Economic Review. - American Economic Association - AEA. - Vol. 102.2012, 3, p. 30-34
|
Publisher: |
American Economic Association - AEA |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Rational inattention: A review
Mackowiak, Bartosz, (2021)
-
Optimal Sticky Prices under Rational Inattention
Mackowiak, Bartosz, (2009)
-
Information Processing and Limited Liability
Wiederholt, Mirko, (2013)
- More ...