📝 SummarXiv

Abstract

Big data has exponentially dilated consumption demand and speed, but can they all be converted to utility? We argue about the measures of consumption and utility acquisition in CRRA utility function under the condition of big data interaction, we indicate its weakness, i.e., irrational consumption does not lead to the acquisition of utility. We consider that big data, which is different from macro and micro economic signals, formed by general information entropy, affects agents' rational cognition, which makes a part of their consumption ineffective. We preliminarily propose the theory that how dilution mechanism driven by big data will affect agents' cognitive resources. Based on theoretical and empirical analysis, we construct the Consumption Adjustment Weight Function (CAWF) of agents interacting with big data and further apply it to a model of firm wealth distribution with financial frictions, we get analytical solutions according to the Mean Field Game (MFG) and find: Lower financial friction increases the average wealth of firms but also leads to greater wealth inequality. When agents convert effective consumption into utility, which is a weight of total consumption, the average wealth of firms increases with the weight increasing. Meanwhile, wealth inequality follows a U-shaped trend, and it will be the lowest level when the weight approaches to 0.5. In conclusion, we try to provide a new complementary hypothesis to refine the 'Lucas Critique' according to the cognitive resources as endowments involved in the decision-making of agents.