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Mechanics of linear quadratic Gaussian rational inattention tracking problems

Fulton, Chad - 2017

This paper presents a general framework for constructing and solving the multivariate static linear quadratic Gaussian (LQG) rational inattention tracking problem. We interpret the nature of the solution and the implied action of the agent, and we construct representations that formalize how the...

Persistent link: https://www.econbiz.de/10011803264

Why Income Comparison is Rational

Wolpert, David - 2009

In many cultures a major factor affecting a person's happiness is the difference between their income and that of their neighbors, independent of their own income. This effect is strongest when the income difference is negative (richer neighbor). In addition, across their lifetime, a person's...

Persistent link: https://www.econbiz.de/10014211585

Rational Choice and the Price of Marriage

Cherry, Robert - 1998

This paper accepts the thesis that marriage decisions reflect rational behavior based on weighing benefits and costs. It develops a concept of a marriage price that measures the excess services one spouse provides to the other when there are differences in the number of men and women seeking...

Persistent link: https://www.econbiz.de/10014224845

Do Sunk Costs Matter?

McAfee, R. Preston; Mialon, Hugo M.; Mialon, Sue H. - 2007

That sunk costs are not relevant to rational decision-making is often presented as one of the basic principles of economics. When people are influenced by sunk costs in their decision-making, they are said to be committing the sunk cost fallacy. Contrary to conventional wisdom, we argue that, in...

Persistent link: https://www.econbiz.de/10014225506

The devil you know : rational inattention to discrete choices when prior information matters

Pellegrino, Bruno - 2023

In the seminal rational inattention model of Matĕjka and McKay (2015), logit demand arises from the discrete choice of agents who are uncertain about choice payoffs and have access to a flexible, costly information acquisition technology (RI-logit). A notable limitation of this powerful...

Persistent link: https://www.econbiz.de/10014247316

Rational Inattention Via Ignorance Equivalence

Armenter, Roc; Muller-Itten, Michele; Stangebye, Zachary - 2021

We present a novel approach to finite Rational Inattention (RI) models based on the ignorance equivalent, a fictitious action with state-dependent payoffs that effectively summarizes the optimal learning and conditional choices. The ignorance equivalent allows us to recast the RI problem as a...

Persistent link: https://www.econbiz.de/10014048696

Emotion and Rationality : A Critical Review and Interpretation of Empirical Evidence

Pham, Michel Tuan - 2011

The relation between emotion and rationality is assessed by reviewing empirical findings from multiple disciplines. Two … of rationality are considered logical, material, and ecological. Emotional states influence reasoning processes, are … of the affective system that gives rise to these seeming sources of rationality or irrationality are proposed. Therefore …

Persistent link: https://www.econbiz.de/10014026680

Should Rational Economic Agents Attempt to Exert 'Control' Over the Evolution of Their Risk Preferences?

Obrimah, Oghenovo A. - 2022

parameters, α₀(i)=0.1 or α₀(j)=Z-0.1. With T as investment horizon, rationality of each of agents i or j is evident in the …, with full rationality of actions premised on existing awareness' of economic agents, full rationality is nested in the …

Persistent link: https://www.econbiz.de/10013491873

Geometric methods for finite rational inattention

Armenter, Roc; Müller-Itten, Michèle; Stangebye, … - In: Quantitative economics : QE ; journal of the … 15 (2024) 1, pp. 115-144

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...

Persistent link: https://www.econbiz.de/10014496939

Formal Theoretical Evidence that Rationality Consists in 'Moral Actions' and Morality Has, Explicitly Parameterization as, Altruism

Obrimah, Oghenovo A. - 2023

boundedly rational and seek to act rationally. Under the stated condition, rationality consists in `moral actions' and Morality … shown to be inconsistent with rationality. Since empathy has qualification as a subconscious behavioral friction, there …

Persistent link: https://www.econbiz.de/10014260249