ABSTRACT
Information collecting and processing are ongoing activities in a modern economy. Firms estimate demand and costs when planning production, marketing managers estimate the effectiveness of marketing strategies, consumers estimate the quality of a potential purchase (or even estimate their preferences), farmers estimate prices in allocating acreage. In a planned distribution network, planners must forecast local needs, available supplies and availability of distribution channels. Information is typically costly; some sacrifice of current reward is required to obtain information. The information obtained may turn out to be useful, in that it is relevant for future decisions, or it may not. Thus, investment in information is much like investment in a risky asset. How much information should an economic agent accumulate?
