"Rational Inattention" Guides Overloaded Brains, Helps
Economists Understand Market Behavior by Antonella Tutino Vol.
6, No. 3, March 2011 | Issue in PDF Between Internet news
sources, social media and email, people are awash in
information, most of it accessible at near-zero cost. Yet,
humans possess only a finite capacity to process all of it. The
average email user, for example, receives dozens of messages per
day. The messages can’t all receive equal attention. How
carefully does someone read an email from a sibling or friend
before crafting a reply? How closely does a person read an email
from the boss? Limitations on the ability to process information
force people to make choices regarding the subjects to which
they pay more or less attention. Economists have long
acknowledged the existence of human cognitive capacities, but
only in recent years have models embodying such limits known as
“rational inattention” found their way into mainstream
macroeconomics. Rational inattention models have a broad range