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Technology Adoption Under Costly Information Processing

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  • Dominik Naeher

Abstract

A new explanation for imperfect technology adoption is proposed. In the model, agents allocate scarce attention rationally between actions and decide whether and how to adopt a technology. Introducing constraints to information processing gives rise to attentional barriers to technology adoption, which affect optimal adoption behavior. The model can explain why individuals (i) fail to adopt profitable technologies, (ii) fail to make the best use of adopted technology, (iii) treat complementary technologies as substitutes, and (iv) change their adoption decision back and forth over time. The model complements existing learning models and is consistent with empirical evidence.

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  • Dominik Naeher, 2022. "Technology Adoption Under Costly Information Processing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(2), pages 699-753, May.
    • Handle: RePEc:wly:iecrev:v:63:y:2022:i:2:p:699-753
    DOI: 10.1111/iere.12545
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