Behavioral Inattention
Xavier Gabaix
Handbook of Behavioral Economics / NBER · 2019
Abstract
A synthesis of models of limited attention, formalizing how boundedly rational agents allocate scarce attention across features of a decision and systematically neglect less salient dimensions such as taxes, shipping fees, and fine print.
Methodology
Develops and reviews tractable models of inattention—including 'sparsity' and salience-weighting—and connects them to empirical evidence on how attention responds to incentives and salience.
Findings
Inattention is not random but predictable: people underreact to non-salient, shrouded, or complex attributes, and attention increases with stakes and salience. This unifies a wide range of anomalies (tax salience, shrouded add-on pricing, nominal illusion) under one framework.
Applied nudge
Attention is the binding constraint—make welfare-relevant attributes (true price, energy cost, long-run consequence) salient, since users behave as if shrouded dimensions do not exist.
Citation
Gabaix, X. (2019). Behavioral inattention. NBER Working Paper No. 24096. In Handbook of Behavioral Economics.
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