Rational Inattention in Games : Experimental Evidence

In this paper, I test the predictions of rational inattention theory using a laboratory experiment where one role in a two-player game faces cognitive costs to process information about a payoff-relevant state. I find that subjects who face these unobservable cognitive costs have state-dependent choices and action-dependent response times that are consistent with being rationally inattentive, which provides evidence that subjects can adjust their cognitive processes in line with strategic incentives. In addition, I find that the estimated marginal costs of attention are similar when directly measured from the actions of players who face attentional costs and when indirectly measured from the actions of players who strategically interact with these players, which suggests that subjects who face unobservable cognitive costs are also treated as if they are rationally inattentive by other players