Quantifying information and uncertainty
We examine ways to measure the amount of information generated by a piece of news and the amount of uncertainty implicit in a given belief. Say a measure of information is valid if it corresponds to the value of news in some decision problem. Say a measure of uncertainty is valid if it corresponds to expected utility loss from not knowing the state in some decision problem. We axiomatically characterize all valid measures of information and uncertainty. We show that if measures of information and uncertainty arise from the same decision problem, then they are coupled in that the expected reduction in uncertainty always equals the expected amount of information generated. We provide explicit formulas for the measure of information that is coupled with any given measure of uncertainty and vice versa. Finally, we show that valid measures of information are the only payment schemes that never provide incentives to delay information revelation.

Please sign up for meetings below:
Date: 22 February 2019, 14:15 (Friday, 6th week, Hilary 2019)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room A
Speaker: Emir Kamenica (The University of Chicago Booth School of Business)
Organising department: Department of Economics
Part of: Nuffield Economic Theory Seminar
Booking required?: Not required
Audience: Members of the University only
Editor: Melis Boya