Rational inattention and public signals

Daniel Susskind ()
Additional contact information
Daniel Susskind: Oxford University

Social Choice and Welfare, 2022, vol. 58, issue 2, No 2, 225-255

Abstract: Abstract In this paper, I study the incentives to produce public signals in a rational inattention setting. Agents working in teams must take two actions, but are uncertain about the optimal actions. One optimal action has a ‘private’ signal associated with it—if an agent pays attention to it, only her uncertainty about the optimal action is reduced. But the other has a ‘public’ signal associated with it—if an agent pays attention to it, the uncertainty of all agents is reduced. The result is a new collective action problem in attention allocation. In the Nash equilibrium, too little attention is paid to the optimal action with the public signal relative to the efficient allocation. Even as the number of agents increases, they remain uncertain about the optimal action—in contrast to a social planner who eliminates all uncertainty. And this has surprising implications for thinking about the optimal size of teams.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s00355-021-01348-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sochwe:v:58:y:2022:i:2:d:10.1007_s00355-021-01348-5

Ordering information: This journal article can be ordered from
http://www.springer. ... c+theory/journal/355

DOI: 10.1007/s00355-021-01348-5

Access Statistics for this article

Social Choice and Welfare is currently edited by Bhaskar Dutta, Marc Fleurbaey, Elizabeth Maggie Penn and Clemens Puppe

More articles in Social Choice and Welfare from Springer, The Society for Social Choice and Welfare Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().