Original title: An equivalence between rational inattention problems and complete-information conformity games
Authors: Ilinov, Pavel ; Jann, Ole
Document type: Research reports
Year: 2022
Language: eng
Series: CERGE-EI Working Paper Series, volume: 719
Abstract: We consider two types of models: (i) a rational inattention problem (as known from the literature) and (ii) a conformity game, in which fully informed players find it costly to deviate from average behavior. We show that these problems are equivalent to each other both from the perspective of the participant and the outside observer: Each individual faces identical trade-offs in both situations, and an observer would not be able to distinguish the two models from the choice data they generate. We also establish when individual behavior in the conformity game maximizes welfare.
Keywords: conformity; equivalence; rational inattention

Institution: Economics Institute AS ČR (web)
Document availability information: Fulltext is available at external website.
External URL: https://www.cerge-ei.cz/pdf/wp/Wp719.pdf
Original record: http://hdl.handle.net/11104/0331370

Permalink: http://www.nusl.cz/ntk/nusl-508585


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