We develop an axiomatic theory of information acquisition that captures the idea of constant marginal costs in information production: the cost of generating two independent signals is the sum of their costs, and generating a signal with probability half costs half its original cost. Together with a monotonicity and a continuity conditions, these axioms determine the cost of a signal up to a vector of parameters.These parameters have a clear economic interpretation and determine the difficulty of distinguishing states. We argue that this cost function is a versatile modeling tool that leads to more realistic predictions than mutual information.

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docs.google.com/spreadsheets/d/1r32GYl_eL8bInJ04hTBz1ezVGXB8YitXA3om1Yjoh5I/edit#gid=0

Link to paper:

tamuz.caltech.edu/papers/cost_of_information.pdf

**Date**: 31 May 2019, 14:15 (Friday, 5th week, Trinity 2019)**Venue**: Manor Road Building

Manor Road OX1 3UQSee location on maps.ox**Details**: Seminar Room A**Speaker**: Philipp Strack (UC Berkeley)**Organising department**: Department of Economics**Part of**: Nuffield Economic Theory Seminar**Booking required?**: Not required**Audience**: Members of the University only- Editor: Melis Boya