Related papers: The Indirect Cost of Information
We study the problem of what causes prices to change. We define the mechanical impact of a trading order as the change in future prices in the absence of any future changes in decision making, and its it informational impact as the…
Information and uncertainty are closely related and extensively studied concepts in a number of scientific disciplines such as communication theory, probability theory, and statistics. Increasing the information arguably reduces the…
Information theory gives rise to a novel method for causal skeleton discovery by expressing associations between variables as tensors. This tensor-based approach reduces the dimensionality of the data needed to test for conditional…
We develop an information-theoretic framework for discrete dynamics grounded in a comparison-cost functional on ratios. Given two quantities compared via their ratio \(x=a/b\), we assign a cost \(F(x)\) measuring deviation from equilibrium…
We modify the standard model of price competition with horizontally differentiated products, imperfect information, and search frictions by allowing consumers to flexibly acquire information about a product's match value during their…
We review possible measures of complexity which might in particular be applicable to situations where the complexity seems to arise spontaneously. We point out that not all of them correspond to the intuitive (or "naive") notion, and that…
The maximal information coefficient (MIC), which measures the amount of dependence between two variables, is able to detect both linear and non-linear associations. However, computational cost grows rapidly as a function of the dataset…
The session-based recommendation (SBR) garners increasing attention due to its ability to predict anonymous user intents within limited interactions. Emerging efforts incorporate various kinds of side information into their methods for…
What is information, physically, and why does it so reliably emerge in living, cultural, and technological systems? Existing theories quantify uncertainty, cost, or compressibility, but do not identify which physical structures count as…
This paper analyzes repeated version of the bilateral trade model where the independent payoff relevant private information of the buyer and the seller is correlated across time. Using this setup it makes the following five contributions.…
Information estimates such as the ``direct method'' of Strong et al. (1998) sidestep the difficult problem of estimating the joint distribution of response and stimulus by instead estimating the difference between the marginal and…
This paper studies the provision of incentives for information acquisition. Information is costly for an agent to acquire and unobservable to a principal. We show that any Pareto optimal contract has a decomposition into a fraction of…
Indirect reciprocity promotes cooperation by allowing individuals to help others based on reputation rather than direct reciprocation. Because it relies on accurate reputation information, its effectiveness can be undermined by information…
In time-to-event settings, the presence of competing events complicates the definition of causal effects. Here we propose the new separable effects to study the causal effect of a treatment on an event of interest. The separable direct…
What does the informational complexity of dynamical networked systems tell us about intrinsic mechanisms and functions of these complex systems? Recent complexity measures such as integrated information have sought to operationalize this…
Complexity remains one of the central challenges in science and technology. Although several approaches at defining and/or quantifying complexity have been proposed, at some point each of them seems to run into intrinsic limitations or…
The minimization of the length of syntactic dependencies is a well-established principle of word order and the basis of a mathematical theory of word order. Here we complete that theory from the perspective of information theory, adding a…
Does the asymptotic variance of the maximum composite likelihood estimator of a parameter of interest always decrease when the nuisance parameters are known? Will a composite likelihood necessarily become more efficient by incorporating…
We study the complexity of approximations to the normalized information distance. We introduce a hierarchy of computable approximations by considering the number of oscillations. This is a function version of the difference hierarchy for…
We study an information acquisition problem in which an informed trader acquires costly information prior to trading in the Kyle equilibrium. The cost of information acquisition is represented by an entropy cost. Regardless of the prior…