MORE NONCONCAVITIES IN INFORMATION PROCESSINGFUNCTIONS

The productivity of (human) information processing as an economicactivity is a question that is raising some interest. Using Marschak’s evaluationframework, Radner and Stiglitz have shown that, under certain conditions,the production function of this activity has increasingmarginal returns in its initialstage. This paper shows that, under slightly different conditions, this informationprocessing function has repeated convexities with ongoing processing activity.Even for smooth changes in the signals’ likelihoods, the function is only piecewisesmooth with non-differentiable convexities at points of conditional changes ofaction. For linear likelihood functions the processing value proves to be piecewiselinear with convexities at these levels.