Behavioral Inattention

Produced by: 
National Bureau of Economic Research
Available from: 
December 2017
Paper author(s): 
Xavier Gabaix
Topic: 
Financial Economics
Macroeconomics - Economic growth - Monetary Policy
Microeconomics - Competition - Productivity
Year: 
2018

Inattention is a central, unifying theme for much of behavioral economics. It permeates such disparate fields as microeconomics, macroeconomics, finance, public economics, and industrial organization. It enables us to think in a rather consistent way about behavioral biases, speculate about their origins, and trace out their implications for market outcomes. This survey first discusses the most basic models of attention, using a fairly unified framework. Then, it discusses the methods used to measure attention, which present a number of challenges on which much progress has been done. It then examines the various theories of attention, both behavioral and more Bayesian. It finally discusses some applications. For instance, inattention offers a way to write a behavioral version of basic microeconomics, as in consumer theory, producer theory, and Arrow-Debreu. A last section is devoted to open questions in the attention literature

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