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Attentional role of quota implementation
Matveenko, Andrei ; Mikhalishchev, S.
This paper introduces a new role of quotas, e.g., labor market quotas: the attentional role. We study the effect of quota implementation on the attention allocation strategy of a rationally inattentive (RI) agent. Our main result is that an RI agent who is forced to fulfill a quota never hires the candidates without acquiring information about them, unlike an unrestricted RI agent\nwho in some cases bases her decision on prior belief only. We also show that in our context quotas are equivalent to other types of affirmative policies such as subsidies and blind resume policy. We show how our results can be used to set a quota level that increases the expected value of the chosen candidate and also decreases statistical discrimination and discrimination in terms of how much attention is paid to each applicant. At the same time, quota implementation could be destructive if the social planner has imperfect information about the parameters of the model.\n
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Essays on Implications of Rational Inattention to Discrete Choices
Matveenko, Andrei ; Matějka, Filip (advisor) ; Afrouzi, Hassan (referee) ; Joo, Joonhwi (referee)
In the first chapter we study fundamental links between two popular approaches to con sumer choice: the multinomial logit model of individual discrete choice and the CES utility function, which describes a multiple choice of a representative consumer. We base our analysis on the rational inattention (RI) model and show that the demand system of RI agents, each of whom chooses a single option, coincides with the demand system of a fictitious representative agent with a CES utility function. Thus, the diversified choice of the representative agent may be explained by the heterogeneity in signals received by the RI agents. We obtain a new interpretation for the elasticity of substitution and the weighting coefficients of the CES utility function. Specifically, we provide a correspon dence between parameters of the CES utility function, prior knowledge and marginal cost of information. In the second paper we investigate the role of a value of a known policy with certain payoff on agents' information acquisition and belief polarization. We model agents to be rationally inattentive: some information about the new policy can be acquired before a choice is made, but doing so is costly. We show that even small changes in the agents' perception of the status quo can lead to polarization of opinions. Such...
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