Information Processing and Limited Liability

Article, Preprint OPEN
Bartosz Mackowiak; Mirko Wiederholt;
  • Journal: American Economic Review,volume 102,issue 3 May,pages30-34
  • Related identifiers: doi: 10.1257/aer.102.3.30
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Decision-makers often face limited liability and thus know that their loss will be bounded. We study how limited liability affects the behavior of an agent who chooses how much information to acquire and process in order to take a good decision. We find that an agent fa... View more
  • References (3)

    [1] Ma´ckowiak, Bartosz, and Mirko Wiederholt. 2009. “Optimal Sticky Prices under Rational Inattention.” American Economic Review, 99(3): 769-803.

    [2] Ma´ckowiak, Bartosz, and Mirko Wiederholt. 2011. “Inattention to Rare Events.” CEPR Discussion Paper 8626.

    [3] Sims, Christopher A. 2003. “Implications of Rational Inattention.” Journal of Monetary Economics, 50(3): 665-90.

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