Rational allocation of attention in decision-making

Stefanie Yvonne Schmitt

No 114, BERG Working Paper Series from Bamberg University, Bamberg Economic Research Group

Abstract: This paper proposes a model of attention allocation in decision-making. Attention has various definitions across the literature. Here, I understand attention as selecting information for costly processing. The paper investigates how an agent rationally allocates attention. The resulting attention allocation is context-dependent and influences choice quality. Next to inattention, two strategies of allocating attention prevail. These strategies share similarities with bottom-up and top-down attention - concepts reported in the psychological literature. Exploring firms' strategic considerations reveals an incentive for firms to produce high quality and highlight quality, if consumers expect low quality, and to exploit consumers by producing low quality and shrouding quality, if agents expect high quality.

Keywords: rational attention; information-processing; decision-making; shrouding (search for similar items in EconPapers)
JEL-codes: D03 D10 D81 D83 L15 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-mic, nep-ore and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bamber:114

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