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The University of Southampton
EconomicsPart of Economic, Social and Political Science

1503 The Value of Information Under Unawareness (S. Galanis)

Author: Spyros Galanis

Paper number 1503


The value of information is examined in a single-agent environment with unawareness. Al-though the agent has a correct prior about events he is aware of and has a clear understanding of his available actions and payo s, his unawareness may lead him to commit information processing errors and to behave suboptimally. As a result, the value of information can be negative, contrasting what is true in the standard model with partitional information and no unawareness. We show that the source of the agent's suboptimal behavior is that he misunderstands the information revealed by his varying awareness, treating it asymmetrically.
JEL-Classi cations: C70, D01, D80, D82.
Keywords: unawareness, value of information, uncertainty, knowledge, bounded perception, awareness.

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