Emotional Decision-Makers and Anomalous Attitudes towards Information

We use a simple version of the Psychological Expected UtilityModel
(Caplin and Leahy, Q J Econ 116:55–80, 2001) to analyze the optimal choice of
information accuracy by an individual who is concerned with anticipatory feeling.
The individual faces the following trade-off: on the one hand information
may lead to emotional costs, on the other the higher the information accuracy,
the higher the efficiency of decision-making. We completely and explicitly
characterize how anticipatory utility depends on information accuracy, and
study the optimal amount of information acquisition. We obtain simple and
explicit conditions under which the individual prefers no-information or partial
information gathering.We show that anomalous attitudes towards information
can be more frequent and articulated than previously thought.