Abstract
This paper studies the choice problem of a rationally inattentive decision maker and shows how optimal information choices can be found when the information acquisition costs are additively separable. As an application of this general problem, a simple buyer-seller problem is considered where the buyer is rationally inattentive to the seller's riskiness. It is shown that the optimal pricing strategy of the seller should be non-monotonic in the degree of the buyer's attentiveness.
Original language | English |
---|---|
Number of pages | 22 |
Publication status | Unpublished - 2013 |
Keywords
- additive separability
- information acquisition
- non-monotonic pricing
- rational inattention