Information Gaps: A Theory of Preferences Regarding the Presence and Absence of Information

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We propose a theory of preferences for acquiring or avoiding information and for exposure to uncertainty (i.e., risk or ambiguity) which is based on thoughts and feelings about information as well as information gaps, that is, specific questions that the decision maker recognizes and is aware of. In our theoretical framework utility depends not just on material payoffs but also on beliefs and the attention devoted to them. We specify assumptions regarding the determinants of attention to information gaps, characterize a specific utility function that describes feelings about information gaps, and show with examples that our theory can make sense both of the acquisition of noninstrumental information and of the avoidance of possibly useful information, as well as source-specific risk and ambiguity aversion and seeking.

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