Constrained versus Unconstrained Rational Inattention
The rational inattention literature is split between two versions of the model: in one, mutual information of states and signals are bounded by a hard constraint, while, in the other, it appears as an additive term in the decision maker’s utility function. The resulting constrained and unconstrained...
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| Format: | Article |
| Language: | English |
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MDPI AG
2021-01-01
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| Series: | Games |
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| Online Access: | https://www.mdpi.com/2073-4336/12/1/3 |
| _version_ | 1827698349250183168 |
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| author | Yaron Azrieli |
| author_facet | Yaron Azrieli |
| author_sort | Yaron Azrieli |
| collection | DOAJ |
| description | The rational inattention literature is split between two versions of the model: in one, mutual information of states and signals are bounded by a hard constraint, while, in the other, it appears as an additive term in the decision maker’s utility function. The resulting constrained and unconstrained maximization problems are closely related, but, nevertheless, their solutions differ in certain aspects. In particular, movements in the decision maker’s prior belief and utility function lead to opposite comparative statics conclusions. |
| first_indexed | 2024-03-10T13:28:09Z |
| format | Article |
| id | doaj.art-85bb210223ea4486a702cfd14a9627c3 |
| institution | Directory Open Access Journal |
| issn | 2073-4336 |
| language | English |
| last_indexed | 2024-03-10T13:28:09Z |
| publishDate | 2021-01-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Games |
| spelling | doaj.art-85bb210223ea4486a702cfd14a9627c32023-11-21T08:39:40ZengMDPI AGGames2073-43362021-01-01121310.3390/g12010003Constrained versus Unconstrained Rational InattentionYaron Azrieli0Department of Economics, The Ohio State University, Columbus, OH 43210, USAThe rational inattention literature is split between two versions of the model: in one, mutual information of states and signals are bounded by a hard constraint, while, in the other, it appears as an additive term in the decision maker’s utility function. The resulting constrained and unconstrained maximization problems are closely related, but, nevertheless, their solutions differ in certain aspects. In particular, movements in the decision maker’s prior belief and utility function lead to opposite comparative statics conclusions.https://www.mdpi.com/2073-4336/12/1/3costly informationrational inattentionShannon entropy |
| spellingShingle | Yaron Azrieli Constrained versus Unconstrained Rational Inattention Games costly information rational inattention Shannon entropy |
| title | Constrained versus Unconstrained Rational Inattention |
| title_full | Constrained versus Unconstrained Rational Inattention |
| title_fullStr | Constrained versus Unconstrained Rational Inattention |
| title_full_unstemmed | Constrained versus Unconstrained Rational Inattention |
| title_short | Constrained versus Unconstrained Rational Inattention |
| title_sort | constrained versus unconstrained rational inattention |
| topic | costly information rational inattention Shannon entropy |
| url | https://www.mdpi.com/2073-4336/12/1/3 |
| work_keys_str_mv | AT yaronazrieli constrainedversusunconstrainedrationalinattention |