Geometric methods for finite rational inattention
Journal
Quantitative Economics
ISSN
1759-7323
ISSN-Digital
1759-7331
Type
journal article
Date Issued
2024-01
Author(s)
Abstract
We present a geometric approach to the finite Rational Inattention (RI) model, recasting it as a convex optimization problem with reduced dimensionality that is well suited to numerical methods. We provide an algorithm that outperforms existing RI computation techniques in terms of both speed and accuracy in both static and dynamic RI problems. We further introduce methods to quantify the impact of numerical inaccuracy on the model's outcomes and to produce robust predictions regarding the most frequently implemented actions.
HSG Classification
contribution to scientific community
Refereed
yes
Volume
15
Number
1
Start page
115
End page
144
Subject(s)
Division(s)