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Title:Limited Attention as the Scarce Resource in an Information-rich Economy PDF Logo
Authors:Falkinger, Josef
Issue Date:2005
Series/Report no.:IZA Discussion paper series 1538
Abstract:This paper uses basic empirical facts from attention and perception psychology for a behavioral approach to equilibrium analysis at the industry and the macroeconomic level. The paper endogenously determines whether an economy is information-rich and whether scarcity of attention complements economic scarcity. A conventional economic equilibrium results if subjects have free attention capacity. At the positive level, the impacts of ITprogress, international integration and media on equilibrium diversity and level of attentionseeking activities are shown. At the normative level, welfare, efficiency and optimal policy interventions are characterized. Finally, behavioral effects of intensified attention-seeking on market power, sectoral economic structure and work-leisure choice are considered.
Subjects:limited attention
information-rich economies
media
diversity
behavioral equilibrium analysis
JEL:D80
L10
D50
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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