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Coordination with Rational Inattention
Yang, Ming - 2012
We study information acquisition in a coordination game with incomplete information. To capture the idea that players can flexibly decide what information to acquire, we do not impose any physical restriction on feasible information structure. Facing an informational cost measured by reduction...
Persistent link: https://www.econbiz.de/10013114641
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Selecting Information in Financial Markets : Herding and Opinion Swings in a Heterogeneous Mimetic Rational Agent-Based Model
Vié, Aymeric - 2018
As expectations are driven by information, its selection is central in explaining common knowledge building and unraveling in financial markets. This paper addresses this information selection problem by proposing imitation as a key mechanism to explain opinion dynamics. Behavioral and cognitive...
Persistent link: https://www.econbiz.de/10012928480
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Hierarchies of belief and interim rationalizability
Ely, Jeffrey C.; Peski, Marcin - In: Theoretical economics : TE ; an open access journal in … 1 (2006) 1, pp. 19-65
In games with incomplete information, conventional hierarchies of belief are incomplete as descriptions of the players' information for the purposes of determining a player's behavior. We show by example that this is true for a variety of solution concepts. We then investigate what is essential...
Persistent link: https://www.econbiz.de/10011704466
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Chapter 2. Rationality and Dynamic Consistency Under Risk and Uncertainty
Hammond, Peter J.; Zank, Horst - In: Handbook of the economics of risk and uncertainty : volume 1, (pp. 41-97). 2014
For choice with deterministic consequences, the standard rationality hypothesis is ordinality, i.e., maximization of a …
Persistent link: https://www.econbiz.de/10014025530
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Rationally Uncertain Expectations
Osband, Kent - 2020
When financial securities are modeled as claims on stochastic processes, each trader's beliefs at time can be summarized by a subjective probability distribution . The dominant Rational Expectations approach typically treats as a singleton that correctly gauges risks. In reality, financial risks...
Persistent link: https://www.econbiz.de/10012827005
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Rational Information Leakage
Indjejikian, Raffi - 2016
Empirical evidence suggests that information leakage in capital markets is common. We present a trading model to study the incentives of an informed trader (e.g., a well informed insider) to voluntarily leak information about an asset's value to one or more independent traders. Our model shows...
Persistent link: https://www.econbiz.de/10013008537
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Investment, rational inattention, and delegation
Lindbeck, Assar; Weibull, Jörgen W. - 2017
We analyze investment decisions when information is costly, with and without delegation to an agent. We use a rational-inattention model and compare it with a canonical signal-extraction model. We identify three "investment conditions". In "sour" conditions, no information is acquired and no...
Persistent link: https://www.econbiz.de/10011657490
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Competing to Persuade a Rationally Inattentive Agent
Jain, Vasudha - 2020
Firms strategically disclose product information in order to attract consumers, butrecipients often find it costly to process all of it, especially when products have complexfeatures. We study a model of competitive information disclosure by two senders, inwhich the receiver may garble each...
Persistent link: https://www.econbiz.de/10012848500
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Rational Groupthink
Harel, Matan; Mossel, Elchanan; Strack, Philipp; Tamuz, Omer - 2018
We study how effectively long-lived rational agents learn from repeatedly observing each others’ actions. We find that in the long run, information aggregation fails, and the fraction of private information transmitted goes to zero as the number of agents gets large. With Normal signals, in...
Persistent link: https://www.econbiz.de/10014036576
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A Dynamic Theory of War and Peace
Yared, Pierre - 2014
This paper develops a dynamic theory of war and peace. In our framework, an aggressive country can forcibly extract … concessions from a non-aggressive country via war. Alternatively, it can avoid war and allow the non-aggressive country to make … private shock which deems concessions too costly. We show that the realization of war sustains concessions along the …
Persistent link: https://www.econbiz.de/10014224039