Rational Inattention, Competitive Supply, and Psychometrics. Issue 3 (13th April 2020)

• Record Type: Journal Article
• Authors: Caplin, Andrew; Csaba, Dániel; Leahy, John; Nov, Oded
• Is Part Of: Quarterly journal of economics. Volume 135:Issue 3(2020)
• Page Start: 1681
• Page End: 1724
• Publication Date: 2020-04-13
• Subjects: Economics -- Periodicals; 330.05
• DOI: 10.1093/qje/qjaa011
• Languages: English
• ISSNs: 0033-5533

Abstract

Abstract: We introduce a simple method of recovering attention costs from choice data. Our method rests on a precise analogy with production theory. Costs of attention determine consumer demand and consumer welfare, just as a competitive firm's technology determines its supply curve and profits. We implement our recovery method experimentally, outline applications, and link our work to the broader literature on inattention and mistaken decisions.