Rationally Inattentive Behavior: Characterizing and Generalizing Shannon Entropy
By Andrew Caplin, Mark Dean, John Leahy. Journal of Political Economy, 2017
146 citations recorded by the source corpus.
We introduce three new classes of attention cost functions: posterior separable, uniformly posterior separable, and invariant posterior separable. As with the Shannon cost function, all can be solved using Lagrangian methods. Uniformly posterior-separable cost functions capture many forms of sequential learning and hence play a key role in many applications. Invariant posterior-separable cost functions make learning strategies depend exclusively on payoff uncertainty. We introduce two behavioral axioms, Locally Invariant Posteriors and Only Payoffs Matter, which identify posterior-separable functions as uniformly and invariant posterior separable, respectively. In combination, they pinpoint the Shannon cost function.
Subfields: Artificial Intelligence, Management Science and Operations Research, Statistical and Nonlinear Physics
View Paper: https://www.semanticscholar.org/paper/5681e2223ac3d672bca6ec4d43bf59515d7eae99
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Artificial Intelligence
In Management Science and Operations Research
In Statistical and Nonlinear Physics
Citations in the corpus
- A Behavioral New Keynesian Model (2020, methodology): “Maćkowiak and Wiederholt (2015), Caplin et al. (2017)).81 I use the “sparsity” approach developed progressively since Gabaix (2014), because seems to capture a good deal of the psychology of attention (Gabaix (2017)), and it is particularly tractable. For instance, it allows us to give a behavioral ”