This paper presents a laboratory experiment that directly tests the theoretical predictions of consumption choices under rational inattention. Subjects are asked to select consumption when income is random. They can optimally decide to reduce uncertainty about income by acquiring signals about...

Firms often worry about how buyers will react when there is an inventory shortage, but the anticipation of facing a shortage may also impact buyer behavior. In this paper we use a combination of theoretical modeling, computational methods, and laboratory experiments to understand buyers' search...