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Asymmetries in information processing in a decision theory framework

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  • Santos-Pinto, Luís

Abstract

Research in psychology suggests that some individuals are more sensitive to positive than to negative information while others are more sensitive to negative rather than positive information. I take these cognitive positive-negative asymmetries in information processing to a Bayesian decision-theory model and explore its consequences in terms of decisions and payoffs. I show that in monotone decision problems economic agents with more positive-responsive information structures are always better off, ex-ante, when they face problems where payoffs are relatively more sensitive to the action chosen when the state of nature is favorable.

Suggested Citation

  • Santos-Pinto, Luís, 2003. "Asymmetries in information processing in a decision theory framework," MPRA Paper 3146, University Library of Munich, Germany, revised 27 Apr 2007.
    • Handle: RePEc:pra:mprapa:3146
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    References listed on IDEAS

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    More about this item

    Keywords

    Information Processing; Decision Theory;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines

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