Samuel N. Cohen, Timo Henckel, G. Menzies, Johannes Muhle‐Karbe, D. J. Zizzo
{"title":"Switching Cost Models as Hypothesis Tests","authors":"Samuel N. Cohen, Timo Henckel, G. Menzies, Johannes Muhle‐Karbe, D. J. Zizzo","doi":"10.2139/ssrn.3245004","DOIUrl":null,"url":null,"abstract":"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.","PeriodicalId":425229,"journal":{"name":"ERN: Hypothesis Testing (Topic)","volume":"42 1","pages":"0"},"PeriodicalIF":0.0000,"publicationDate":"2018-08-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"8","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"ERN: Hypothesis Testing (Topic)","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.2139/ssrn.3245004","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 8
Abstract
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.