Information Transmission and Rational Inattention

Antonella Tutino
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Antonella Tutino: Federal Reserve Bank of Dallas

No 286, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: We study the problem of optimal communication strategy between a fully informed agent and a rationally inattentive agent. The fully informed agent observes a sequence of shocks and transmits a message to the limited-capacity agent who takes a set of actions in response to the message. The problem of the informed agent is to seek the optimal signaling strategy that induces a behavior consistent with minimal welfare loss, uniformly over a given class of bounded utility functions. We characterize the optimal signaling strategy for both the static and the dynamic cases.

Date: 2015
New Economics Papers: this item is included in nep-mic and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed015:286

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