Les Cahiers de Recherche - HEC Paris
Confidence as a Source of Deferral
Abstract: One apparent reason for deferring a decision abstaining
from choosing, leaving the decision open to be taken by someone else, ones
later self, or nature is for lack of sufficient confidence in the
relevant beliefs. This paper develops an axiomatic theory of decision in
situations where a costly deferral option is available that captures this
source of deferral. Drawing on it, a preliminary behavioural comparison
with other accounts of deferral, such as those based on information
asymmetry, is undertaken, and a simple multi-factor model of deferral
involving both confidence and information considerations is formulated.
The model suggests that incorporating confidence can account for cases of
deferral that traditional accounts have trouble explaining.
Keywords: Confidence; multiple priors; deferral; delegation; information acquisition; value of information; incomplete preferences; (follow links to similar papers)
JEL-Codes: D80; D81; D83; (follow links to similar papers)
65 pages, October 10, 2014
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