NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Rational Inattention, Competitive Supply, and Psychometrics

Andrew Caplin, Dániel Csaba, John Leahy, Oded Nov

NBER Working Paper No. 25224
Issued in November 2018, Revised in May 2020
NBER Program(s):Technical Working Papers

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.

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Document Object Identifier (DOI): 10.3386/w25224

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