We study the portfolio decision of a household with limited information-processing capacity in a setting with recursive utility, which has two key features. First, intertemporal substitution and risk aversion are disentangled. Second, the household has a preference for the timing of the...

This paper explores how the introduction of rational inattention (RI) -- that agents process information subject to finite channel capacity -- affects optimal consumption and investment decisions in an otherwise standard intertemporal model of portfolio choice. We first explicitly derive optimal...