Working Paper: NBER ID: w25224
Authors: Andrew Caplin; Daniel Csaba; John Leahy; Oded Nov
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.
Keywords: Rational inattention; Attention costs; Consumer demand; Decision making; Psychometrics
JEL Codes: C14; C91; D01; D04; D11; D6; D8
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| attention costs (D91) | consumer decision-making (D12) |
| attention costs (D91) | consumer welfare (D69) |
| variations in incentives (M52) | quality of decision-making (D91) |
| attention costs (D91) | decision time (D79) |