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Constrained versus Unconstrained Rational Inattention

Department of Economics, The Ohio State University, Columbus, OH 43210, USA
Received: 30 October 2020 / Revised: 10 December 2020 / Accepted: 29 December 2020 / Published: 5 January 2021
(This article belongs to the Special Issue Limited Attention)
The rational inattention literature is split between two versions of the model: in one, mutual information of states and signals are bounded by a hard constraint, while, in the other, it appears as an additive term in the decision maker’s utility function. The resulting constrained and unconstrained maximization problems are closely related, but, nevertheless, their solutions differ in certain aspects. In particular, movements in the decision maker’s prior belief and utility function lead to opposite comparative statics conclusions. View Full-Text
Keywords: costly information; rational inattention; Shannon entropy costly information; rational inattention; Shannon entropy
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MDPI and ACS Style

Azrieli, Y. Constrained versus Unconstrained Rational Inattention. Games 2021, 12, 3.

AMA Style

Azrieli Y. Constrained versus Unconstrained Rational Inattention. Games. 2021; 12(1):3.

Chicago/Turabian Style

Azrieli, Yaron. 2021. "Constrained versus Unconstrained Rational Inattention" Games 12, no. 1: 3.

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