January 19, 2022, 14:00–15:30
Job Market Seminar
This paper develops a dynamic model of information acquisition, in which the decision maker lacks control over the timing of their action. It characterizes the optimal dynamic experiment when the decision maker can flexibly choose all relevant aspects of the information they acquire. The cost of an experiment depends on the quantity of information it produces. At the optimum, the decision maker concentrates resources in generating a single piece of breakthrough news, contradicting their plan of action. In the absence of such news, the decision maker becomes more confident in their intentions. This leads them to sacrifice the frequency with which breakthroughs arrive in order to increase their impact on choice behaviour. These are in stark contrast with the case where the timing of actions is endogenous, in which breakthroughs confirm beliefs, and the resolution of the trade-off between frequency and precision is reversed.