Cost-Benefit Analysis in Reasoning: The Value-of-Information Case with Forward-Looking Agent

• Authors: Antonio Penta and Larbi Alaoui.
• BSE Working Paper: 110739 | July 21
• Keywords: Choice theory , value of information , cognition and incentives , reasoning , fact-free learning , sequential heuristics , forward looking , Bayesian consistency
• JEL codes: D01, D03, D80, D83
• Choice theory
• value of information
• cognition and incentives
• reasoning
• fact-free learning
• sequential heuristics
• forward looking
• Bayesian consistency

We extend the baseline setting in Alaoui and Penta (2018) to provide the representation of the cost-benefit analysis in reasoning of a (non-myopic) forward looking agent who anticipates his future steps of reasoning to take the form of a partitional information structure evaluated in a Bayesian-consistent way.