The Logarithmic Investor's Decision to Acquire Costly Information
This paper explores the relationship between the decision to purchase a costly information system and the wealth of an investor with a logarithmic utility function, where the information system may provide information concerning the payoffs from risky investments. It is shown, for the logarithmic investor, that (a) there is a wealth "break-even point" below which it is suboptimal to purchase an information system at a fixed cost, and (b) the amount the investor would be willing to pay for access to the information system is a linearly increasing function of his wealth.
Year of publication: |
1974
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Authors: | Morris, James R. |
Published in: |
Management Science. - Institute for Operations Research and the Management Sciences - INFORMS, ISSN 0025-1909. - Vol. 21.1974, 4, p. 383-391
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Publisher: |
Institute for Operations Research and the Management Sciences - INFORMS |
Saved in:
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