The allocation of attention
Subtitle: theory and evidence
By: [by] Xavier Gabaix, David Laibson [and] Guillermo Moloche
Contributors: Laibson, David I.; Moloche, Guillermo; Massachusetts Institute of Technology. Dept. of Economics
Series: Working paper series / Massachusetts Institute of Technology, Dept. of Economics -- working paper 03-31; Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 03-31.
Publisher: Massachusetts Institute of Technology, Dept. of Economics
Published: 2003
Place of publication: Cambridge, MA
Language: eng
Number of pages: 37
Description: A host of recent studies show that attention allocation has important economic consequences. This paper reports the first empirical test of a cost-benefit model of the endogenous allocation of attention. The model assumes that economic agents have finite mental processing speeds and cannot analyze all of the elements in complex problems. The model makes tractable predictions about attention allocation, despite the high level of complexity in our environment. The model successfully predicts the key empirical regularities of attention allocation measured in a choice experiment. In the experiment, decision time is a scarce resource and attention allocation is continuously measured using Mouselab. Subject choices correspond well to the quantitative predictions of the model, which are derived from cost-benefit and option-value principles. Keywords: attention, satisficing, Mouselab, bounded rationality, behavioral economics, experimental economics, cognitive modeling. JEL Classifications: C7, C9, D8.
Notes: "August 29, 2003."

Includes bibliographical references (p. 34-37).

Abstract in HTML and working paper for download in PDF available via World Wide Web at the Social Science Research Network.

Financial support from a Weinberg NSF Graduate Research Fellowship, the Russell Sage Foundation and from the NSF SES-0099029