Rational Inattention Dynamics: Inertia and Delay in Decision-Making

Jakub Steiner, Matějka, Filip and Colin Stewart
Authors registered in the RePEc Author Service: Filip Matejka

No 10720, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We solve a general class of dynamic rational-inattention problems in which an agent repeatedly acquires costly information about an evolving state and selects actions. The solution resembles the choice rule in a dynamic logit model, but it is biased towards an optimal default rule that depends only on the history of actions, not on the realized state. We apply the general solution to the study of (i) the status quo bias; (ii) inertia in actions leading to lagged adjustments to shocks; and (iii) the tradeoff between accuracy and delay in decision-making.

Keywords: Rational inattention; Information acquisition; Dynamic logit; Adjustment delay (search for similar items in EconPapers)
JEL-codes: D81 D83 D90 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-mic and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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Related works:
Journal Article: Rational Inattention Dynamics: Inertia and Delay in Decision‐Making (2017)
Working Paper: Rational Inattention Dynamics: Inertia and Delay in Decision-Making (2016)
Working Paper: Rational Inattention Dynamics: Inertia and Delay in Decision-Making (2015)
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