Search Results

Showing results 1 to 2 of approximately 2.

(refine search)
SORT BY: PREVIOUS / NEXT
Keywords:information acquisition 

Working Paper
Rational Inattention via Ignorance Equivalence

We present a novel approach to finite Rational Inattention (RI) models basedon the ignorance equivalent, a fictitious action with state-dependent payoffsthat effectively summarizes the optimal learning and conditional choices. Theignorance equivalent allows us to recast the RI problem as a standard expectedutility maximization over an augmented choice set called the learning-proofmenu, yielding new insights regarding the behavioral implications of RI, inparticular as new actions are added to the menu. Our geometric approach isalso well suited to numerical methods, outperforming existing ...
Working Papers , Paper 20-24

Working Paper
Overconfidence, Subjective Perception, and Pricing Behavior

We study the implications of overconfidence for price setting in a monopolistic competition setup with incomplete information. Our price-setters overestimate their abilities to infer aggregate shocks from private signals. The fraction of uninformed firms is endogenous; firms can obtain information by paying a fixed cost. We find two results: (1) overconfident firms are less inclined to acquire information, and (2) prices might exhibit excess volatility driven by nonfundamental noise. We explore the empirical predictions of our model for idiosyncratic price volatility.
FRB Atlanta Working Paper , Paper 2017-14

FILTER BY year

FILTER BY Series

FILTER BY Content Type

FILTER BY Jel Classification

C63 1 items

D4 1 items

D8 1 items

D81 1 items

D83 1 items

E3 1 items

show more (1)

FILTER BY Keywords

PREVIOUS / NEXT