Across many domains of decision making, people seem both rational and irrational. We
review recent work that aims to reconcile these apparently contradictory views by modeling …

We review the recent literature on rational inattention, identify the main theoretical
mechanisms, and explain how it helps us understand a variety of phenomena across fields …

We introduce three new classes of attention cost functions: posterior separable, uniformly
posterior separable, and invariant posterior separable. As with the Shannon cost function, all …

We provide testable conditions under which the cost of acquiring information is given by the
expected reduction of a measure of uncertainty (eg, entropy). The assumption, under the …

This paper studies strategic decisions under uncertainty for which past data are not
available. It provides microfoundations of the theory-based view of the firm by showing that …

We consider a decision maker (DM) who, before taking an action, seeks information by
allocating her limited attention dynamically over different news sources that are biased …

This paper develops a theory for the expected cost of optimally acquired information when
information can be acquired sequentially. We study the “reduced-form” Indirect Cost …

We develop an axiomatic theory of information acquisition that captures the idea of constant
marginal costs in information production: the cost of generating two independent signals is …

Decisions take time, and the time taken to reach a decision is likely to be informative about
the cost of more precise judgments. We formalize this insight using a dynamic model of …

The drift-diffusion model (DDM) is a model of sequential sampling with diffusion signals,
where the decision maker accumulates evidence until the process hits either an upper or …