Rational Inattention: A Review

16 March, 2023

Congratulations to Filip Matějka on his new article "Rational Inattention: A Review", which appears, along with co-authors Bartosz Maćkowiak and Mirko Wiederholt, in the Journal of Economic Literature, belonging to the so-called Q1 journals that achieve the best publication quality in the world.

Let's explain what this means. 

This is an essential tool for investigating the level of influence and impact that a journal has had on the international research community. It does not measure the quality of an article but rather that of the journal in which the article was published.

Each subject category of journals is divided into four quartiles: Q1, Q2, Q3, Q4. Q1 is occupied by the top 25% of journals in the list; Q2 is occupied by journals in the 25 to 50% group; Q3 is occupied by journals in the 50 to 75% group, and Q4 is occupied by journals in the 75 to 100% group. The most prestigious journals within a subject area are those which occupy the first quartile, Q1.

What is the review about?

They review the recent literature on rational inattention and identify the main theoretical mechanisms and how it helps us understand a variety of phenomena across fields of economics. The theory of rational inattention assumes that agents cannot process all available information but can choose which exact pieces of information to attend to. Several important results in economics have been built around imperfect information. Nowadays, many more forms of information than ever before are available due to new technologies and yet we are able to digest little of it. 
Which form of imperfect information we possess and act upon is thus largely determined by what information we choose to pay attention to. These choices are driven by current economic conditions and imply behaviour that feature numerous empirically supported departures from standard models. Combining these insights about human limitations with the optimizing approach of neoclassical economics yields a new and generally applicable model.

Read the complete review