Student Faculty Macro Lunch - "Rational Inattention: A Disciplined Behavioral Model"

Presentation | September 10 | 12-1 p.m. | 639 Evans Hall

 Filip Matejka, CERGE, Charles University

 Clausen Center

Abstract: A recent growing body of studies shows that many important phenomena in economics are, or can be, driven by the fact that humans cannot digest all available information, but they can choose which exact pieces of information to attend to. Such phenomena span macroeconomics, finance, labor economics, political economy, and beyond. People’s choices of what information
to attend to, i.e., what optimal heuristic to use, are driven by current economic conditions and determine the form of mistakes that they make. Combining these behavioral insights together with optimizing approaches of classical economics yields a new generally applicable model. The implied behavior features numerous types of empirically supported departures from existing classical models, is potentially highly practical for answering policy questions, and motivates
further empirical work. One distinction from most models in behavioral economics is that this model allows for studying the adaptation of agents’ behavioral biases due to changes in policy
or economic conditions.

  RSVP online by September 6

 "Rational Inattention: A Disciplined Behavioral Model"