TY - JOUR
T1 - Rational Inattention in the Infield
AU - Bhattacharya, Vivek
AU - Howard, Greg
PY - 2021
Y1 - 2021
N2 - This paper provides evidence of rational inattention by experienced professionals in strategic interactions. We add rational inattention to a game of matching pennies with state-dependent payoffs. Unlike the full-information mixed-strategy Nash equilibrium, payoffs of different actions need not be equated state-by-state. Moreover, players respond partially to payoff differences, this responsiveness is stronger when attention costs are lower, strategies converge to full-information Nash as stakes increase, and average payoffs across all states are approximately equal across actions. We test these predictions using data on millions of pitches from Major League Baseball, where we observe strategies, payoffs, and proxies for attention costs.
AB - This paper provides evidence of rational inattention by experienced professionals in strategic interactions. We add rational inattention to a game of matching pennies with state-dependent payoffs. Unlike the full-information mixed-strategy Nash equilibrium, payoffs of different actions need not be equated state-by-state. Moreover, players respond partially to payoff differences, this responsiveness is stronger when attention costs are lower, strategies converge to full-information Nash as stakes increase, and average payoffs across all states are approximately equal across actions. We test these predictions using data on millions of pitches from Major League Baseball, where we observe strategies, payoffs, and proxies for attention costs.
UR - https://uofi.app.box.com/v/rational-inattention
M3 - Article
JO - American Economic Journal: Microeconomics
JF - American Economic Journal: Microeconomics
SN - 1945-7669
ER -