Rational inattentiveness in a forecasting experiment

Henry Goecke (), Wolfgang Luhan and Michael Roos ()

Journal of Economic Behavior & Organization, 2013, vol. 94, issue C, 80-89

Abstract: While standard theory assumes rational, optimizing agents under full information, the latter is rarely found in reality. Information has to be acquired and processed—both involving costs. In rational-inattentiveness models agents update their information set only when the benefit outweighs the information cost. We test the rational-inattentiveness model in a controlled laboratory environment. Our design is a forecasting task with costly information and a clear cost–benefit structure. While we find numerous deviations from the model predictions on the individual level, the aggregate results are consistent with rational-inattentiveness and sticky information models rejecting simpler behavioral heuristics.

Keywords: Experiment; Information; Rational inattentiveness; Forecasting (search for similar items in EconPapers)
JEL-codes: C53 C91 E10 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:94:y:2013:i:c:p:80-89

DOI: 10.1016/j.jebo.2013.08.013

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