Switching cost models as hypothesis tests

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.

• Publication year

  2018

• Venue

  Economics Letters

• Publication date

  2018-08-29

• Fields of study

  Mathematics, Economics

• Identifiers
  DOI 10.1016/J.ECONLET.2018.11.014arXiv 1808.09686
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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