Selective sampling with information-storage constraints

0532802 - NHÚ 2021 RIV GB eng J - Journal Article
Jehiel, P. - Steiner, Jakub
Selective sampling with information-storage constraints.
Economic Journal. Roč. 130, č. 630 (2020), s. 1753-1781. ISSN 0013-0133. E-ISSN 1468-0297
EU Projects: European Commission(XE) 770652 - BEHAVFRICTIONS
Institutional support: RVO:67985998
Keywords : bounded rationality * cognitive constraints * information processing
OECD category: Economic Theory
Impact factor: 3.178, year: 2020
Method of publishing: Limited access
https://doi.org/10.1093/ej/uez068

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 payoff state and her terminal action. We provide an optimality condition for the emerging stochastic choice. The condition highlights the benefits of selective memory applied to the extracted signals. Implications—obtained in simple examples—include (i) confirmation bias, (ii) speed-accuracy complementarity, (iii) overweighting of rare events, and (iv) salience effect.
Permanent Link: http://hdl.handle.net/11104/0311204