Rational Inattention via Ignorance Equivalence
Type
working paper
Date Issued
2026-04-30
Author(s)
Abstract
We introduce the concept of the ignorance equivalent to effectively summarize the payoff possibilities of a rationally inattentive (RI) agent. The ignorance equivalent is a unique fictitious action that does not distort learning incentives when added to the agent’s menu, but also makes ignorance optimal. By restating the RI problem as a choice over a richer menu without learning, the approach provides new insights for menu expansion, the formation of consideration sets, and belief elicitation. When RI agents with different learning costs interact, their ignorance equivalents emerge in equilibrium, facilitating trade that allows agents to emulate the first-best learning strategy.
Language
English (United States)
Keywords
Rational inattention
information acquisition
learning. JEL: D81
D83
C63
HSG Classification
not classified
Refereed
No
Subject(s)
File(s)![Thumbnail Image]()
open.access
Name
RI_via_IE.pdf
Size
1.17 MB
Format
Adobe PDF
Checksum (MD5)
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