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Article: Attention Misallocation, Social Welfare and Policy Implications

TitleAttention Misallocation, Social Welfare and Policy Implications
Authors
Issue Date2015
PublisherELSEVIER. The Journal's web site is located at http://www.elsevier.com/locate/jedc
Citation
Journal of Economic Dynamics and Control, 2015, v. 59, p. 37–57 How to Cite?
AbstractWe examine how agents allocate attention between private and public signals to reduce the uncertainty about observation noises when coordination is an important concern. In this setting, the attention allocation may not be monotone in endowed attention capacity. Agents may decrease their attention on or even ignore the more accurate signal when capacity increases. As a result, social welfare may decrease when they have more attention to process information. And it can be even higher when agents possess a finite amount of capacity than when they have an infinite amount of capacity. We derive sufficient and necessary conditions under which multiple equilibria emerge and study the implications of equilibrium multiplicity for macroeconomic policies.
Persistent Identifierhttp://hdl.handle.net/10722/212049

 

DC FieldValueLanguage
dc.contributor.authorChen, H-
dc.contributor.authorLuo, Y-
dc.contributor.authorPei, G-
dc.date.accessioned2015-07-21T02:20:56Z-
dc.date.available2015-07-21T02:20:56Z-
dc.date.issued2015-
dc.identifier.citationJournal of Economic Dynamics and Control, 2015, v. 59, p. 37–57-
dc.identifier.urihttp://hdl.handle.net/10722/212049-
dc.description.abstractWe examine how agents allocate attention between private and public signals to reduce the uncertainty about observation noises when coordination is an important concern. In this setting, the attention allocation may not be monotone in endowed attention capacity. Agents may decrease their attention on or even ignore the more accurate signal when capacity increases. As a result, social welfare may decrease when they have more attention to process information. And it can be even higher when agents possess a finite amount of capacity than when they have an infinite amount of capacity. We derive sufficient and necessary conditions under which multiple equilibria emerge and study the implications of equilibrium multiplicity for macroeconomic policies.-
dc.languageeng-
dc.publisherELSEVIER. The Journal's web site is located at http://www.elsevier.com/locate/jedc-
dc.relation.ispartofJournal of Economic Dynamics and Control-
dc.titleAttention Misallocation, Social Welfare and Policy Implications-
dc.typeArticle-
dc.identifier.emailChen, H: hengchen@hku.hk-
dc.identifier.emailLuo, Y: yluo@econ.hku.hk-
dc.identifier.authorityChen, H=rp01315-
dc.identifier.authorityLuo, Y=rp01083-
dc.identifier.doi10.1016/j.jedc.2015.05.003-
dc.identifier.hkuros245383-
dc.identifier.hkuros245338-
dc.identifier.hkuros245339-
dc.publisher.placeAmsterdam-

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