Limited attention and its effects on economic policy
With EU funding, the LIMITED_ATTENTION (Evolutionary, social, and strategic aspects of limited attention and economic policy implications) project examined how limited attention evolves as well as the social and strategic features of assigning limited attention and how it impacts political economics and public policy. The work led to a better understanding of existing literature on the evolution of allocating limited attention. Behavioural economics has found attention to be a limited cognitive resource. Project partners analysed how agents allocate this resource. They investigated to what extent mathematical tools from evolutionary game theory can be implemented to model adaptive learning. The team also examined how the allocation of attention may change over a period and what its implications are. Project members studied the evolution of being attentive to various characteristics. They also considered the degree to which limited cognition can provide a framework for an evolutionary basis of prospect theory, especially for probability weighting. Research was carried out on the hawk-dove game, a popular and influential conflict model for two players, and on other games. This helped to determine what the outcome is when the role a player assumes and the ensuing social make-up are developed from within. LIMITED_ATTENTION has provided further insight into the different aspects of limited attention. Key economic players and policymakers stand to benefit from the outcomes.
Keywords
Limited attention, economic policy, game theory, evolution, adaptive learning
