The Reduction of Decision Complexity: Normative Policies and the Role of Information

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Luigi Mittone Department of Economics, University of Trento, Via Inama 5, 38100 Trento - Italy

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The principal aim of this work is to interpret the function of the state as a mechanism for reducing the complexity of the decisional process of the economic agents. The paper takes the hit from a famous case reported by Thomas Schelling - the ‘hockey players dilemma’ - to develop a model based on a modified version of the prisoner dilemma. The model compares two alternative strategies implemented by the government, the production of information versus the production of rules, both aimed to reduce irrational behaviours. The main result is that the production of information cannot by itself restore the perfect information.

Luigi Mittone Department of Economics, University of Trento, Via Inama 5, 38100 Trento - Italy

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This paper has benefited from the suggestions and comments made by the participants at a seminar held in the Economics Department of the University of Trento, to whom I owe my sincere thanks. I am especially indebted to Massimo Egidi and to Paolo Patelli, who were of great help in development of the dynamic model.

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