Working Paper: NBER ID: w19876
Authors: Andrew Caplin; Mark Dean
Abstract: 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.
Keywords: No keywords provided
JEL Codes: D80
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Incentives (M52) | Attention Allocation (D91) |
| Attention Strategy (D91) | State-dependent Stochastic Choice Data (C25) |
| Attention Allocation (D91) | Informed Decision-making (D87) |
| Costs of Information Acquisition (D83) | Attention Strategy (D91) |