Rational inattention with multiple attributes

David Walker-Jones

Journal of Economic Theory, 2023, vol. 212, issue C

Abstract: This paper studies a new measure for the cost of learning that allows the different attributes of the options faced by an agent to differ in their associated learning costs. The new measure maintains the tractability of Shannon's classic measure but produces richer choice predictions and identifies a new form of informational bias significant for welfare and counterfactual analysis that is conducted with the multinomial logit model. Necessary and sufficient conditions are provided for optimal agent behavior under the new measure for the cost of learning.

Keywords: Rational inattention; Perceptual distance; Costly learning; Shannon Entropy (search for similar items in EconPapers)
JEL-codes: D83 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:212:y:2023:i:c:s0022053123000844

DOI: 10.1016/j.jet.2023.105688

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