Journal title
Economics Letters
Last updated
2024-03-26T16:09:33.99+00:00
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.
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.
Symplectic ID
911976
Download URL
http://arxiv.org/abs/1808.09686v1
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Publication type
Journal Article
Publication date
22 Nov 2018