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Information Transmission and Rational Inattention

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  • Antonella Tutino

    (Federal Reserve Bank of Dallas)

Abstract

We study the problem of optimal communication strategy between a fully informed agent and a rationally inattentive agent. The fully informed agent observes a sequence of shocks and transmits a message to the limited-capacity agent who takes a set of actions in response to the message. The problem of the informed agent is to seek the optimal signaling strategy that induces a behavior consistent with minimal welfare loss, uniformly over a given class of bounded utility functions. We characterize the optimal signaling strategy for both the static and the dynamic cases.

Suggested Citation

  • Antonella Tutino, 2015. "Information Transmission and Rational Inattention," 2015 Meeting Papers 286, Society for Economic Dynamics.
    • Handle: RePEc:red:sed015:286
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    References listed on IDEAS

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    1. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-1054, July.
    2. Nabil I. Al-Najjar, 2009. "Decision Makers as Statisticians: Diversity, Ambiguity, and Learning," Econometrica, Econometric Society, vol. 77(5), pages 1371-1401, September.
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