Asymmetric Attention

40 Pages Posted: 24 Apr 2018

See all articles by Alexandre Kohlhas

Alexandre Kohlhas

Stockholm University - Institute for International Economic Studies (IIES)

Ansgar Walther

Imperial College London; Centre for Economic Policy Research (CEPR)

Date Written: February 14, 2018


We document simultaneous over- and under-responses to new information by households, firms, and professional forecasters in survey data. Such behavior is inconsistent with existing theories based on either behavioral bias or rational inattention. We develop a structural model of information choice in which people base expectations on observables that can reconcile the seemingly contradictory facts. We show that optimally-chosen, asymmetric attention to different observables can explain the co-existence of over- and under-responses. We then embed our model of information choice into a micro-founded macroeconomic model, which generates expectations consistent with the survey data. We demonstrate that our model creates over-optimistic consumption beliefs in booms and predictability in consumption changes.

Keywords: Expectations, learning, inattention

JEL Classification: D83, D84, E32

Suggested Citation

Kohlhas, Alexandre and Walther, Ansgar, Asymmetric Attention (February 14, 2018). Available at SSRN: or

Alexandre Kohlhas (Contact Author)

Stockholm University - Institute for International Economic Studies (IIES) ( email )

Stockholm, SE-10691


Ansgar Walther

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

United Kingdom

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