Journal of Political Economy Vol. 131 No. 12 2023
Experimental Tests of Rational Inattention
open access
Abstract
We use laboratory experiments to test models of rational inattention, in which people acquire information to maximize utility net of information costs. We show that subjects adjust their attention in response to changes in incentives, in line with the rational inattention model. However, our results are qualitatively inconsistent with information costs that are linear in Shannon entropy, as is often assumed in applied work. Our data are best fit by a generalization of the Shannon model, which allows for a more flexible response to incentives and for some states of the world to be harder to distinguish than others.
- DOI
- 10.1086/725174
- Volume
- 131
- Issue
- 12
- Pages
- 3415-3461
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref