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Attention and choices with multiple states and actions: A laboratory experiment

Author

Listed:
  • Civelli, Andrea
  • Deck, Cary
  • Tutino, Antonella
Abstract
We study how a rationally inattentive decision maker chooses state-contingent actions under uncertainty in complex environments. We explore a series of decision problems by varying the number of states as well as incentive structures. We fully characterize the theoretical solutions and compare them to choices made by subjects facing those problems in a controlled laboratory experiment.

Suggested Citation

  • Civelli, Andrea & Deck, Cary & Tutino, Antonella, 2022. "Attention and choices with multiple states and actions: A laboratory experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 199(C), pages 86-102.
    • Handle: RePEc:eee:jeborg:v:199:y:2022:i:c:p:86-102
    DOI: 10.1016/j.jebo.2022.05.013
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    References listed on IDEAS

    as
    1. Filip Matêjka & Alisdair McKay, 2015. "Rational Inattention to Discrete Choices: A New Foundation for the Multinomial Logit Model," American Economic Review, American Economic Association, vol. 105(1), pages 272-298, January.
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    3. Andrew Caplin & Mark Dean, 2015. "Revealed Preference, Rational Inattention, and Costly Information Acquisition," American Economic Review, American Economic Association, vol. 105(7), pages 2183-2203, July.
    4. Andrew Caplin & Mark Dean & John Leahy, 2019. "Rational Inattention, Optimal Consideration Sets, and Stochastic Choice," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(3), pages 1061-1094.
    5. Dewan, Ambuj & Neligh, Nathaniel, 2020. "Estimating information cost functions in models of rational inattention," Journal of Economic Theory, Elsevier, vol. 187(C).
    6. Sims, Christopher A., 2003. "Implications of rational inattention," Journal of Monetary Economics, Elsevier, vol. 50(3), pages 665-690, April.
    7. Benjamin Hébert & Michael Woodford, 2021. "Neighborhood-Based Information Costs," American Economic Review, American Economic Association, vol. 111(10), pages 3225-3255, October.
    8. Botond Koszegi & Adam Szeidl, 2013. "A Model of Focusing in Economic Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(1), pages 53-104.
    9. Kryvtsov, Oleksiy & Petersen, Luba, 2021. "Central bank communication that works: Lessons from lab experiments," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 760-780.
    10. Cheremukhin, Anton & Popova, Anna & Tutino, Antonella, 2015. "A theory of discrete choice with information costs," Journal of Economic Behavior & Organization, Elsevier, vol. 113(C), pages 34-50.
    11. Andrew Caplin & Mark Dean, 2013. "Behavioral Implications of Rational Inattention with Shannon Entropy," NBER Working Papers 19318, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Sean, Duffy & John, Smith, 2023. "Stochastic choice and imperfect judgments of line lengths: What is hiding in the noise?," MPRA Paper 116382, University Library of Munich, Germany.

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    More about this item

    Keywords

    Rational inattention; Laboratory experiment; Information processing capacity;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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