Arna Olafsson, Michaela Pagel, 07 August 2018

Theories of rational inattention argue that individuals incur costs when they look for information, and that they compare these costs with the expected benefits from that information. This column uses empirical evidence on online logins to bank accounts to show that in this context, attention tends to be selective – subject to an 'ostrich effect' that avoids the discovery of bad news, for example – rather than rational. This selective attention may intensify individual financial problems such as debt traps.

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