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14.06. Micro Theory Seminar: Colin Stewart

Micro Theory Seminar with Colin Stewart (University of Toronto)

Event details
  • Micro Theory Seminar
When Jun 14, 2017
from 16:30 to 17:45
Where Faculty Room
Contact Name Stephan Lauermann
Contact Email
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Rational Inattention Dynamics

 joint with Jakub Steiner and Filip Matejka


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 is independent of the realized state. The model provides the same fit to choice data as dynamic logit, but, because of the bias, yields different counterfactual predictions. 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.


Paper: Download

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