Original title:
Discrete actions in information-constrained tracking problems
Authors:
Matějka, Filip ; Sims, CH. A. Document type: Research reports
Year:
2011
Language:
eng Series:
CERGE-EI Working Paper Series, volume: 441 Abstract:
Optimal actions of an agent facing a Shannon capacity constraint on the translation of an uncertain signal into an action can easily turn out to be discretely distributed, even when the objective function and the initial distribution of uncertainty contain no discrete elements. We show this result analytically in a broad class of cases.
Keywords:
adjustment frictions; rational inattention; sticky prices Project no.: CEZ:AV0Z70850503 (CEP), LC542 (CEP) Funding provider: GA MŠk