Revealed Preference, Rational Inattention, and Costly Information Acquisition / Andrew Caplin, Mark Dean.

Format:

Book

Author/Creator:

Caplin, Andrew.

Contributor:

National Bureau of Economic Research.

Dean, Mark.

Series:

Working Paper Series (National Bureau of Economic Research) no. w19876.

NBER working paper series no. w19876

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

We develop a revealed preference test for optimal acquisition of costly information. The test encompasses models of rational inattention, sequential signal processing, and search. We provide limits on the extent to which attention costs can be recovered from choice data. We experimentally elicit state dependent stochastic choice data of the form the tests require. In simple cases, tests confirm that subjects adjust their attention in response to incentives as the theory dictates.

Notes:

Print version record

January 2014.