Timing and Decision Making

摘要

The paper presents a normative model which accounts for timing aspects of decision making under uncertainty. We build a model for a decision making process and then solve it, seeking the best timing to make a decision. It is based on several assumptions: information resources become more accurate over time (due to systematic improvements of a given information system), the value of utility or payoff functions deteriorates over time (moreover, loss of opportunities over time is also analyzed), and decision makers observe information only once, before making a decision. In addition, the assumptions of Bounded Rationality are integrated in the model, that is, decision makers stick to a rigid decision rule. The proposed analytical framework allows examining a decision rule over time. A cost of information gathering and a cost of decision delays are also incorporated in the model.