Rational Attention and Adaptive Coding: A Puzzle and a Solution
American Economic Review
vol. 104,
no. 5, May 2014
(pp. 507-13)
Abstract
Adaptive Coding is the property of the brain to adjust its response to statistical properties of the environment. Its effect is an improved discrimination among signals under the constraints on the dynamic range of its response. It can thus be considered the neural correspondent of Rational Attention, which models how a rational decisionmaker allocates attention among different informative signals. There is strong evidence of existence of widespread adaptive coding. Adaptive coding introduces a dependence of choice from the environment which is not observed in behavior. We discuss potential solutions and propose Hebbian learning as a potentially satisfactory answer.Citation
Padoa-Schioppa, Camillo, and Aldo Rustichini. 2014. "Rational Attention and Adaptive Coding: A Puzzle and a Solution." American Economic Review, 104 (5): 507-13. DOI: 10.1257/aer.104.5.507Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief
- D87 Neuroeconomics