Hidden actions and preferences for timing of resolution of uncertainty

Arbeitspapier

We study preferences for timing of resolution of objective uncertainty in a menuchoice model with two stages of information arrival. We characterize a general class of utility representations called hidden action representations, which interpret an intrinsic preference for timing of resolution of uncertainty as if an unobservable action is taken between the resolution of the two periods of information arrival. These representations permit a richer class of preferences for timing than was possible in the model of Kreps and Porteus (1978) by incorporating a preference for exibility. Our model contains several special cases where this hidden action can be given a novel economic interpretation, including a subjective-state-space model of ambiguity aversion and a model of costly contemplation.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Paper ; No. 1567

Classification and Topics

• Classification: Wirtschaft ; Criteria for Decision-Making under Risk and Uncertainty
• Subject: temporal preferences ; preference for flexibility ; hidden action ; subjective uncertainty

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ergin, Haluk ; Sarver, Todd
• Event: Veröffentlichung
• (who): Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science
• (where): Evanston, IL
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/97259
• Last update: 10.03.2025, 11:43 AM CET