Rationally inattentive preferences and hidden information costs

Henrique Roscoe De Oliveira, Tommaso Denti, Maximilian Mihm, Kemal Ozbek

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

We show how information acquisition costs can be identified using observable choice data. Identifying information costs from behavior is especially relevant when these costs depend on factors—such as time, effort, and cognitive resources—that are difficult to observe directly, as in models of rational inattention. Using willingness-to-pay data for opportunity sets—which require more or less information to make choices—we establish a set of canonical properties that are necessary and sufficient to identify information costs. We also provide an axiomatic characterization of the induced rationally inattentive preferences and show how they reveal the amount of information a decision-maker acquires.

Original languageEnglish (US)
Pages (from-to)621-654
Number of pages34
JournalTheoretical Economics
Volume12
Issue number2
DOIs
StatePublished - May 1 2017

Fingerprint

Information costs
Costs
Hidden information
Information acquisition
Axiomatic characterization
Rational inattention
Decision maker
Willingness-to-pay

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

Cite this

Roscoe De Oliveira, Henrique ; Denti, Tommaso ; Mihm, Maximilian ; Ozbek, Kemal. / Rationally inattentive preferences and hidden information costs. In: Theoretical Economics. 2017 ; Vol. 12, No. 2. pp. 621-654.
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Rationally inattentive preferences and hidden information costs. / Roscoe De Oliveira, Henrique; Denti, Tommaso; Mihm, Maximilian; Ozbek, Kemal.

In: Theoretical Economics, Vol. 12, No. 2, 01.05.2017, p. 621-654.

Research output: Contribution to journalArticle

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