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Selective Sampling with Information-Storage Constraints

Author

Listed:
  • Philippe Jehiel

    (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, UCL - Department of Medical Physics and Biomedical Engineering - UCL - University College of London [London])

  • Jakub Steiner

    (UZH - Universität Zürich [Zürich] = University of Zurich, CERGE-EI - UK - Univerzita Karlova [Praha, Česká republika] = Charles University [Prague, Czech Republic])

Abstract
A memoryless agent can acquire arbitrarily many signals. After each signal observation, she either terminates and chooses an action, or she discards her observation and draws a new signal. By conditioning the probability of termination on the information collected, she controls the correlation between the payo_ state and her terminal action. We provide an optimality condition for the emerging stochastic choice. The condition highlights the bene_ts of selective memory applied to the extracted signals. Implications|obtained in a simple class of binary problems| include (i) confirmation bias, (ii) speed-accuracy complementarity, (iii) overweighting of rare events, and (iv) salience effect.

Suggested Citation

  • Philippe Jehiel & Jakub Steiner, 2019. "Selective Sampling with Information-Storage Constraints," Working Papers halshs-02183450, HAL.
    • Handle: RePEc:hal:wpaper:halshs-02183450
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02183450
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    References listed on IDEAS

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    Cited by:

    1. Leung, Benson Tsz Kin, 2020. "Limited cognitive ability and selective information processing," Games and Economic Behavior, Elsevier, vol. 120(C), pages 345-369.
    2. Leung, B. T. K., 2020. "Learning in a Small/Big World," Cambridge Working Papers in Economics 2085, Faculty of Economics, University of Cambridge.
    3. Benson Tsz Kin Leung, 2020. "Learning in a Small/Big World," Papers 2009.11917, arXiv.org, revised Mar 2023.
    4. Chatterjee, Kalyan & Hu, Tai-Wei, 2023. "Learning with limited memory: Bayesianism vs heuristics," Journal of Economic Theory, Elsevier, vol. 209(C).

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    More about this item

    Keywords

    bounded rationality; information processing; stochastic choice; confirmation bias; speed-accuracy complementarity; probability weighting; salience;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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