Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/119411
Authors: 
Pavan, Alessandro
Year of Publication: 
2014
Series/Report no.: 
Discussion Paper, Center for Mathematical Studies in Economics and Management Science 1576
Abstract: 
I consider a flexible framework of strategic interactions under incomplete information in which, prior to committing their actions (consumption, production, or investment decisions), agents choose the attention to allocate to an arbitrarily large number of information sources about the primitive events that are responsible for the incompleteness of information (the exogenous fundamentals). The analysis sheds light on what type of payoff interdependencies contribute to inefficiency in the allocation of attention. The results for the case of perfect recall (in which the agents remember the influence of each source on their posterior beliefs) are compared to those for the case of bounded recall (in which posterior beliefs about the underlying fundamentals are consistent with Bayesian updating, but in which the agents are unable to keep track of the influence of individual sources on their posterior beliefs).
Subjects: 
endogenous information
strategic complementarity/substitutability
externalities
efficiency
welfare
bounded recall
JEL: 
C72
D62
D83
E50
Document Type: 
Working Paper

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