The optimality of coarse categories in decision-making and information storage
This work addresses a foundational problem in decision theory and information storage, providing a theoretical justification for binary systems, but it appears incremental as it builds on existing efficiency concepts.
The paper tackles the problem of selecting efficient decision criteria under cost constraints, showing that binary criteria minimize the cost of making choice distinctions. It applies this result to information storage, concluding that binary digits (bits) are optimal even with declining marginal costs.
An agent who lacks preferences and instead makes decisions using criteria that are costly to create should select efficient sets of criteria, where the cost of making a given number of choice distinctions is minimized. Under mild conditions, efficiency requires that binary criteria with only two categories per criterion are chosen. When applied to the problem of determining the optimal number of digits in an information storage device, this result implies that binary digits (bits) are the efficient solution, even when the marginal cost of using additional digits declines rapidly to 0. This short paper pays particular attention to the symmetry conditions entailed when sets of criteria are efficient.