LUO, YULEI; YOUNG, ERIC R. - In: Economic Inquiry 52 (2014) 2, pp. 811-829
type="main" xml:lang="en" <p>In this paper we examine the implications of two theories of informational frictions, signal extraction (SE) and rational inattention (RI), for optimal decisions and economic dynamics within the linear-quadratic-Gaussian (LQG) setting. We first show that if the variance...</p>