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Optimal Attention Management: A Tractable Framework

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  • Elliot Lipnowski
  • Laurent Mathevet
  • Dong Wei

Abstract

A well-intentioned principal provides information to a rationally inattentive agent without internalizing the agent's cost of processing information. Whatever information the principal makes available, the agent may choose to ignore some. We study optimal information provision in a tractable model with quadratic payoffs where full disclosure is not optimal. We characterize incentive-compatible information policies, that is, those to which the agent willingly pays full attention. In a leading example with three states, optimal disclosure involves information distortion at intermediate costs of attention. As the cost increases, optimal information abruptly changes from downplaying the state to exaggerating the state.

Suggested Citation

  • Elliot Lipnowski & Laurent Mathevet & Dong Wei, 2020. "Optimal Attention Management: A Tractable Framework," Papers 2006.07729, arXiv.org, revised Mar 2022.
    • Handle: RePEc:arx:papers:2006.07729
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    References listed on IDEAS

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    1. Dezsö Szalay, 2005. "The Economics of Clear Advice and Extreme Options," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(4), pages 1173-1198.
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    4. Wei, Dong, 2021. "Persuasion under costly learning," Journal of Mathematical Economics, Elsevier, vol. 94(C).
    5. Jeffrey Ely & Alexander Frankel & Emir Kamenica, 2015. "Suspense and Surprise," Journal of Political Economy, University of Chicago Press, vol. 123(1), pages 215-260.
    6. Elliot Lipnowski & Laurent Mathevet & Dong Wei, 2020. "Attention Management," American Economic Review: Insights, American Economic Association, vol. 2(1), pages 17-32, March.
    7. Sims, Christopher A., 2003. "Implications of rational inattention," Journal of Monetary Economics, Elsevier, vol. 50(3), pages 665-690, April.
    8. Herbert A. Simon, 1996. "The Sciences of the Artificial, 3rd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691914, December.
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    Cited by:

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    2. Terstiege, Stefan & Wasser, Cédric, 2020. "Buyer-optimal extensionproof information," Journal of Economic Theory, Elsevier, vol. 188(C).
    3. Xiaoyu Cheng, 2020. "Ambiguous Persuasion: An Ex-Ante Formulation," Papers 2010.05376, arXiv.org, revised Nov 2023.
    4. Itai Arieli & Yakov Babichenko & Fedor Sandomirskiy, 2022. "Bayesian Persuasion with Mediators," Papers 2203.04285, arXiv.org, revised Sep 2022.
    5. Tsakas, Elias & Tsakas, Nikolas, 2021. "Noisy persuasion," Games and Economic Behavior, Elsevier, vol. 130(C), pages 44-61.
    6. Wei, Dong, 2021. "Persuasion under costly learning," Journal of Mathematical Economics, Elsevier, vol. 94(C).
    7. Matysková, Ludmila & Montes, Alfonso, 2023. "Bayesian persuasion with costly information acquisition," Journal of Economic Theory, Elsevier, vol. 211(C).
    8. Emir Kamenica & Kyungmin Kim & Andriy Zapechelnyuk, 2021. "Bayesian persuasion and information design: perspectives and open issues," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(3), pages 701-704, October.

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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