The paper investigates firm managers’ strategic disclosure interactions of quantitative value estimates when facing a rationally inattentive trader who also gathers qualitative information. Considering a model with two firms and using the Kyle (1985) model to price each firm’s securities, I...

The popularity of open ascending auctions is often attributed to the fact that openly observable bidding allows to aggregate dispersed information. Another reason behind the frequent utilization of open auction formats may be that they activate revenue enhancing biases. In an experiment, we...

We study belief updating about relative performance in an ego-relevant task. Manipulating the perceived ego-relevance of the task, we show that subjects update their beliefs optimistically because they derive direct utility flows from holding positive beliefs. This finding provides a behavioral...

While people often avoid learning about negative social consequences of their actions in order to behave selfishly, many social situations involve another person who is in a position to impose this information. How does the presence of a potential informer affect information, behavior, and...

We build an empirical model to attribute delays in mortgage refinancing to psychological refinancing costs that inhibit refinancing until incentives are strong enough; and to behavior---potentially attributable to information-gathering costs---that lowers the probability that a household...

Will individuals, especially high-risk individuals, avoid a disease test because of information avoidance? We conduct a field experiment to investigate this issue. We vary the price of a diabetes test (price experiment) and offer both a diabetes test and a cancer test (disease experiment) after...

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...