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Behavioral Inattention

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  • Xavier Gabaix

Abstract

Inattention is a central, unifying theme for much of behavioral economics. It permeates such disparate fields as microeconomics, macroeconomics, finance, public economics, and industrial organization. It enables us to think in a rather consistent way about behavioral biases, speculate about their origins, and trace out their implications for market outcomes. This survey first discusses the most basic models of attention, using a fairly unified framework. Then, it discusses the methods used to measure attention, which present a number of challenges on which a great deal of progress has been achieved, although much more work needs to be done. It then examines the various theories of attention, both behavioral and more Bayesian. It finally discusses some applications. For instance, inattention offers a way to write a behavioral version of basic microeconomics, as in consumer theory and Arrow-Debreu. A last section is devoted to open questions in the attention literature. This chapter is a pedagogical guide to the literature on attention. Derivations are self-contained.

Suggested Citation

  • Xavier Gabaix, 2017. "Behavioral Inattention," NBER Working Papers 24096, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24096
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    1. Behavioral Inattention
      by maximorossi in NEP-LTV blog on 2018-03-06 13:02:08

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    Cited by:

    1. Carmine Ornaghi & Mirco Tonin, 2018. "Water Tariffs and Consumers' Inaction," CESifo Working Paper Series 6990, CESifo Group Munich.
    2. Anagol, Santosh & Balasubramaniam, Vimal & Ramadorai, Tarun, 2018. "Learning from Noise: Evidence from India's IPO Lotteries," CEPR Discussion Papers 13314, C.E.P.R. Discussion Papers.
    3. Andrew Filardo & Marco Jacopo Lombardi & Marek Raczko, 2018. "Measuring financial cycle time," BIS Working Papers 755, Bank for International Settlements.

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    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • E03 - Macroeconomics and Monetary Economics - - General - - - Behavioral Macroeconomics
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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