Limited Attention as a Scarce Resource in Information-Rich Economies
Author: Falkinger, Josef
Source: The Economic Journal, Volume 118, Number 532, October 2008 , pp. 1596-1620(25)
Abstract:This article uses basic facts from the psychology of attention to show how the limited attention of consumers affects economic competition. The article determines endogenously whether an economy is information rich or information poor. A conventional economic equilibrium results if subjects have spare attention capacity. At the positive level, the respective impacts of advances in information technology, international integration and the media on equilibrium diversity and level of attention-seeking activities are shown. At the normative level, the issues of welfare, efficiency and optimal policy interventions are addressed.
Document Type: Research Article
Affiliations: University of Zurich
Publication date: 2008-10-01