Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296355 
Year of Publication: 
2024
Citation: 
[Journal:] Quantitative Economics [ISSN:] 1759-7331 [Volume:] 15 [Issue:] 1 [Year:] 2024 [Pages:] 115-144
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
We present a geometric approach to the finite Rational Inattention (RI) model, recasting it as a convex optimization problem with reduced dimensionality that is well suited to numerical methods. We provide an algorithm that outperforms existing RI computation techniques in terms of both speed and accuracy in both static and dynamic RI problems. We further introduce methods to quantify the impact of numerical inaccuracy on the model's outcomes and to produce robust predictions regarding the most frequently implemented actions.
Subjects: 
Rational inattention
Shannon entropy
information acquisition
learning
consideration sets
JEL: 
C63
D81
D83
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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