Can you provide a reference regarding a revealed preference test(s) of rational inattention models, as proposed by Sims, ergo, using a mutual information measure as the cost of putting attention. And if possible can you briefly explained it. A link that explains the model is given here http://sims.princeton.edu/yftp/Gerzensee/info.pdf
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5$\begingroup$ Please expand this question. "I am interested" is too foggy: Given that you are interested, what is that you require: a list of references of papers where such tests are described? Empirical studies? A description of a test? Also, don't take as granted that all people know about Rational Inattention. Please take the trouble to describe a bit more what this is all about, and ideally, provide a reference where the concept was historically introduced, or presented and described. Don't forget: the better the question, the better the answers, almost all of the time. $\endgroup$– Alecos PapadopoulosNov 22, 2014 at 21:10
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$\begingroup$ I agree with ^ besides the part where Rational Inattention should be explained. A lot of the content here is advanced, such that explaining it in every question would make questions unreadable. Ex-ante, there is no reason why readers should be more familiar with with Neokeynesian Theory than with Sims' work on Rational Inattention. Explaining everything that goes beyond, say, First-year graduate courses in every question would be unpractical imo. $\endgroup$– FooBarNov 22, 2014 at 21:39
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$\begingroup$ Which doesn't say that introductions should be forbidden. If OP has a question for a niche, he can chose to extend the question to include an introduction in order to increase the likelihood of a good answer. On the other hand, the people that need an introduction into niche A are probably not able to answer the "advanced question" in niche A anyways, so the direct advantage of doing so is limited. $\endgroup$– FooBarNov 22, 2014 at 21:43
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$\begingroup$ @FooBar In my opinion, the body of a question should also perform the function to alert users here that something that they may not know, may be of interest to them. Of course they will not be answerers, but they may very well want to follow the thread here, which will increase traffic in the site, which is vital. "Explain a little bit more" could be just "...Rational Inattention, which models formally in an information-theoretic way the limited information-processing capacity of individuals". $\endgroup$– Alecos PapadopoulosNov 22, 2014 at 21:55
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4$\begingroup$ Not familiar with the literature, so I won't attempt to explain it. But, Andrew Caplin and Mark Dean have a working paper that might be of interest. Revealed Preference, Rational Inattention, and Costly Information Acquisition, just scroll down--they have a draft and some supplementary stuff available. $\endgroup$– PburgNov 23, 2014 at 18:31
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2 Answers
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Empirical Evidence on rational inattention:
-Title: Attention Discrimination: Theory and Field Experiments with Monitoring Information Acquisition, Authors: Vojtěch Bartoš, Michal Bauer, Julie Chytilová, and Filip Matějka. Source: IZA Discussion Paper No. 8058.
Link: Attention Discrimination: Theory and Field Experiments with Monitoring Information Acquisition
-Title: What Can Survey Forecasts Tell Us about Information Rigidities? Authors: Olivier Coibion and Yuriy Gorodnichenko. Source: Journal of Political Economy, Vol. 120, No. 1 (February 2012), pp. 116-159
Link: What Can Survey Forecasts Tell Us about Information Rigidities?
-Title: A Rational Theory of Mutual Funds’ Attention Allocation, Authors: Marcin Kacperczyk, Stijn Van Nieuwerburgh, Laura Veldkamp. Source: NYU Working Paper No. 2451/28347 June 5, 2014
Link: A Rational Theory of Mutual Funds’ Attention Allocation
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$\begingroup$ This answer would be much more valuable with a short description/abstract of the papers listed, and/or a link to them. $\endgroup$– FooBarSep 24, 2015 at 9:44
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$\begingroup$ I've added links to the papers now, I believe that anyone interested can and should rather read the original abstracts given by the authors than any imperfect summary of mine. $\endgroup$– BB KingSep 24, 2015 at 10:14
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The following two papers by Andrew Caplin and Mark Dean focus on tests of rational inattention in a lab setting (i.e. with data one could in principle find the field). As BB King said, I won't do it any justice summarizing myself. The second is about Shannon entropy specifically.
http://www.econ.brown.edu/fac/Mark_Dean/Pub_Paper_8.pdf
http://www.econ.brown.edu/fac/Mark_Dean/Working_Paper_10.pdf
