Rational Inattention, Competitive Supply, and Psychometrics

Andrew Caplin, Dániel Csaba, John Leahy, Oded Nov

    Research output: Contribution to journalArticlepeer-review

    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.

    Original languageEnglish (US)
    Pages (from-to)1681-1724
    Number of pages44
    JournalQuarterly Journal of Economics
    Volume135
    Issue number3
    DOIs
    StatePublished - Aug 1 2020

    ASJC Scopus subject areas

    • Economics and Econometrics

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