Emotional Inattention

82 Pages Posted: 15 Apr 2024 Last revised: 19 Apr 2024

See all articles by Lukas Bolte

Lukas Bolte

Carnegie Mellon University

Collin Raymond

Purdue University

Date Written: March 28, 2024

Abstract

We propose a framework where a decision-maker allocates attention across payoff-dimensions, which can be different consumption decisions, realizations of an unknown state, or time periods. Attention has two features: (1) it is instrumentally valuable by allowing the decision-maker to take actions, and (2) it leads to an emotional response, which is proportional to the attention devoted to a dimension and the associated payoff. The framework provides a unifying explanation for a number of behavioral phenomena, such as the ostrich effect, optimism, subjective probability weighting and skewness-seeking behavior, incomplete consumption smoothing, dynamic inconsistency and default effects.

Keywords: Attention, attention utility, information, adaptive preferences

JEL Classification: D81, D83

Suggested Citation

Bolte, Lukas and Raymond, Collin, Emotional Inattention (March 28, 2024). Available at SSRN: https://ssrn.com/abstract=4776766 or http://dx.doi.org/10.2139/ssrn.4776766

Lukas Bolte (Contact Author)

Carnegie Mellon University ( email )

Pittsburgh, PA 15213-3890
United States

Collin Raymond

Purdue University ( email )

610 Purdue Mall
West Lafayette, IN 47907
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
42
Abstract Views
133
PlumX Metrics