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More nonconcavities in information processing functions

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Abstract

The productivity of (human) information processing as an economic activity is a question that is raising some interest. Using Marschak's evaluation framework, Radner and Stiglitz have shown that, under certain conditions, the production function of this activity has increasing marginal returns in its initial stage. This paper shows that, under slightly different conditions, this information processing function has repeated convexities with ongoing processing activity. Even for smooth changes in the signals' likelihoods, the function is only piecewise smooth with non-differentiable convexities at points of conditional changes of action. For linear likelihood functions the processing value proves to be piecewise linear with convexities at these levels.

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  1. Department of Strategic Management and Organization, HHL – Leipzig Graduate School of Management, Jahnallee 59, D-04109, Leipzig, Germany

    Hagen LINDSTÄDT

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  1. Hagen LINDSTÄDT
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Correspondence to Hagen LINDSTÄDT.

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LINDSTÄDT, H. More nonconcavities in information processing functions. Theory and Decision 51, 351–365 (2001). https://doi.org/10.1023/A:1015515312757

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