Abstract
Economists have studied for a long time how decision-makers allocate scarce resources. The recent literature on rational inattention studies how decision-makers allocate the scarce resource attention. The idea is that decision-makers have a limited amount of attention and have to decide how to allocate it. The literature on rational inattention argues that the optimal allocation of attention by decision-makers can explain important features of economic data.
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Wiederholt, M. (2018). Rational Inattention. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2901
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2901
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Online ISBN: 978-1-349-95189-5
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