A note on rational inattention and rate distortion theory

Tommaso Denti, Massimo Marinacci and Luigi Montrucchio
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Tommaso Denti: Cornell University

Decisions in Economics and Finance, 2020, vol. 43, issue 1, No 6, 75-89

Abstract: Abstract In this teaching note, we discuss the relation between rational inattention and a major branch of information theory called “rate distortion theory.” Focusing on methods, we translate tools from rate distortion theory into the language of rational inattention. These tools provide an alternative, more primitive, approach to the study of optimal attention allocation.

Keywords: Rational inattention; Information theory; Rate distortion theory (search for similar items in EconPapers)
JEL-codes: C6 D81 D83 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s10203-019-00243-0

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