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Switching cost models as hypothesis tests

Authors :
Cohen, Samuel N.
Henckel, Timo
Menzies, Gordon
Muhle-Karbe, Johannes
Zizzo, Daniel J.
Cohen, Samuel N.
Henckel, Timo
Menzies, Gordon
Muhle-Karbe, Johannes
Zizzo, Daniel J.
Source :
Economics Letters
Publication Year :
2019

Abstract

We relate models based on costs of switching beliefs (e.g., due to inattention) to hypothesis tests. Specifically, for an inference problem with a penalty for mistakes and for switching the inferred value, a band of inaction is optimal. We show this band is equivalent to a confidence interval, and therefore to a two-sided hypothesis test.

Details

Database :
OAIster
Journal :
Economics Letters
Notes :
en_AU
Publication Type :
Electronic Resource
Accession number :
edsoai.on1291848170
Document Type :
Electronic Resource