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Limited attention as a scarce resource in information-rich economies


Falkinger, Josef (2008). Limited attention as a scarce resource in information-rich economies. Economic Journal, 118(532):1596-1620.

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.

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.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:20 September 2008
Deposited On:17 Nov 2008 16:24
Last Modified:06 Dec 2017 14:37
Publisher:Wiley-Blackwell
ISSN:0013-0133
Additional Information:The definitive version is available at www.blackwell-synergy.com
Publisher DOI:https://doi.org/10.1111/j.1468-0297.2008.02182.x

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