Is Attention Produced Rationally?

Abstract

A large and growing literature shows that attention-increasing interventions, such as reminders and planning prompts, can promote important behaviors. This paper develops a method to investigate whether people value attention-increasing tools rationally. We characterize how the demand for attention improvements must vary with the pecuniary incentive to be attentive and develop quantitative tests of rational inattention that we deploy in two experiments. The first is an experiment with an online education platform run in the field (n=1,373), in which we randomize incentives to complete course modules and incentives to make plans to complete the modules. The second is an online survey-completion experiment (n=944), in which we randomize incentives to complete a survey three weeks later and the price of reminders to complete the survey. In both experiments, as incentives to complete a task increase, demand for attention-improving technologies also increases. However, our tests suggest that the increase in demand for attention improvements is too small relative to the null of full rationality, indicating that people underuse attention-increasing tools. In our second experiment, we estimate that individuals undervalue the benefits of reminders by 59%.

JEL Classification: C91,C93,D91