the ‘economics of attention’: a new avenue of research … the “economics of attention”: a...
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THE ‘ECONOMICS OF ATTENTION’: A NEW AVENUE OF RESEARCH IN COGNITIVE ECONOMICS
Documents de travail GREDEG GREDEG Working Papers Series
Agnès FestréPierre Garrouste
GREDEG WP No. 2012-12
http://www.gredeg.cnrs.fr/working-papers.html
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Groupe de REcherche en Droit, Economie, GestionUMR CNRS 7321
1
The “economics of attention”: a new avenue of research in cognitive economics
by Agnès Festré
University of Picardie (CRIISEA) and University of Nice-Sophia Antipolis (GREDEG1)
and
Pierre Garrouste
University Nice-Sophia Antipolis (GREDEG)
Introduction
One of the main problems of our contemporary economies is not the access to information but
rather information overload, which competes with an insufficient and limited amount of
attention. The rising activity of bloggers or the intense use of social networks (Facebook,
Twitter, etc.) is a clear indication of how crucial this problem is today. One of the main
consequences of this limited attention is indeed that information goods providers are seeking
to capture users’ attention by more and more sophisticated devices that permit to
search, filter and communicate the data that are relevant and useful for consumers (Varian and
Shapiro, 1999). This is why we speak nowadays of the “economics of attention2”. In recent
years, several economists have addressed the problem of limited attention, which Camerer
(2003) listed as one of the more important topics of behavioural economics3. Even in the field
of macroeconomic policy, rational inattention – namely, which parts of macroeconomic data
should rational agents evaluate if limited-processing capacity forces them to discard part of
the data? – has been pinpointed by central bankers as one of the lessons to be drawn from the
1 GREDEG is a Research Group in Law, Economics and Management, UMR 7321, University of Nice-Sophia
Antipolis and CNRS (National Center for Scientific Research).
2 The first appearance of the notion of attention in this field is due to Michael Goldhaber (1997) in a seminal on-
line article where he describes the economics of attention as a sub-field of the “Internet economics”, focusing on
the time-consuming dimension of information, especially when it is overflowing as it is the case in the so-called
Internet Economy where “information glut” have now become commonplace. In such contexts, attention (rather
than information or even knowledge) has become a critical economic resource for decision-making, and attention
a major incentive for business.
3 “Another interesting psychological concept, neglected in behavioral economics until recently, is limited
attention. Attention is the ultimate scarce cognitive resource. It is possible to learn to attend to many stimuli at
the same time—as busy financial-market floor traders and cell-phone-using drivers do—but long-term memory
suffers. Scarce attention might be useful for explaining economic phenomena like organizational structure
(division of labor expands organizational attention but is constrained by the need to coordinate) and advertising
(which “grabs” attention).” (Camerer, 2003, p. 16).
2
2008 financial crisis4 and by some economists as an alternative to the assumption of rational
expectations in inflation forecasting notably (Akerlof, Dickens and Perry 2000, Sims 2003,
Shiller 1997). In the field of financial theory, a paper by Hirschleifer and Teoh (2003)
analyzes the implications of investors’ limited attention for firms’ information policy and
financial market equilibrium.
In management sciences, Davenport and Beck (2001) look at attention from the perspective of
business economics. In other scientific fields such as biology, Dukas (2004) reviews the
evolutionary roots of limited attention and its role in the fitness of animals.
The concept of attention is however a very old one in social sciences. Originally a
philosophical, then a psychological concept, it became popularized in economics thanks to
Herbert Simon, whose work on information and cybernetics in the 50s focused on the
interference between information and cognitive capacities, thus making crucial the issue of
attention scarcity. Contrary to what is usually assumed in economic analysis, namely
unlimited perfect rationality, he considered that the human brain had inherent limits due to
both language articulation and storage capacity.
In particular, we think that the notion of attention could be fruitfully applied to many other
concrete situations than those considered so far, as well as to more abstract theoretical issues
such as, for instance, the problem of convergence of individual decisions or actions towards a
focal point raised for the first time by Schelling in 1960.
This chapter is an attempt to assess the fertility of an economic approach of attention that
draws insights from other disciplines, more specifically, cognitive psychology. This endeavor
also aims at opening up new directions in research in cognitive economics (for a presentation
of existing approaches in cognitive economics, see Egidi and Rizzello 2004, 2 vols.).
The chapter is organized as follows. Section 1 shows that the historical roots of the notion of
attention arose from philosophy, then became an object of intense study in psychology and
subsequently penetrated the fields of economics and organization sciences. Section 2presents
the main characteristics of what is called nowadays the ‘economics of attention’. Section 3
concludes by developing a research agenda on this topic.
4 As indicated by Trichet in his opening address dedicated to “Lessons from the crisis for macroeconomics and
finance theory” at the ECB Central Banking Conference held in Frankfurt in November 2010: “When the crisis
came, the serious limitations of existing economic and financial models immediately became apparent. (…) we
may need to consider a richer characterisation of expectation formation. Rational expectations theory has
brought macroeconomic analysis a long way over the past four decades. But there is a clear need to reexamine
this assumption. Very encouraging work is under way on new concepts, such as learning and rational
inattention.”
3
1. The historical roots of the notion of attention
1.1.Originally a philosophical, then a psychological concept
At its origin the concept of attention was mainly interesting philosophers. Aristotle, for
instance, in De Anima, accepted the assumption that the stronger stimulus tends to extrude the
weaker, but did not conclude that, as a consequence, two objects could be perceived
simultaneously (see Hatfield, 1995, p.8). In fact, before the birth of psychology as an
autonomous science in the 18th
century5, philosophers typically considered attention with the
context of apperception, which refers to the mechanism by which something is identified from
a substrata and new ideas became associated with existing ones. Malebranche (1675) viewed
attention as a natural mechanism allowing the perceptions to be clearer. Condillac (1754)
considered that attention could be identified to sensation and distinguished ‘passive’ attention
(given by the senses) from ‘active’ attention (linked with memory). Leibniz (1704) suggested,
using the metaphor of one’s loss of awareness of the constant sound of a waterfall, that events
could cease to be apperceived (i.e., represented in consciousness) without specific attention.
He therefore claimed that attention determined both what is and what is not apperceived6.
The term of apperception was still employed in the 19th
century by Wundt (1832-1920), one
of the founders of modern psychology, in order to describe different concentric fields of
awareness from general (Blickfeld) to focal (Blickpunkt) features of human awareness. But
one of the most influential works on attention in psychology is found in William James’s
Principles of Psychology (1890), where attention is defined as follows:
“Every one knows what attention is[7]
. It is the taking possession by the mind, in clear
and vivid form, of one out of what seem several simultaneously possible objects or
trains of thought. Focalization, concentration, of consciousness are of its essence. It
5 For a history of the concept of attention in psychology, see Hatfield ([1995] 1998).
Hatfield ([1995] 1998) claims that the notion of attention has been introduced in psychology in 1730 by Wolff
(1738). 6 For a history of the notion of attention in philosophy, see Théodule Ribot (1889) and the introduction by Serge
Nicolas of Ribot (2007). 7 One century later, Pashler points out the difficulty one has to define and grasp the concept of attention: “No one
knows what attention is, … and…There may even not be an ‘it’ there to be known about (although of course
there might be)”. (Pashler, 1998, p. 1).
4
implies withdrawal from some things in order to deal effectively with others and is a
condition which has a real opposite in the confused, dazed, scatterbrained state which
in French is called distraction and Zerstreutheit in German.” (James, The Principles of
Psychology, 1890, p. 403-404).
In James’ time, the method more commonly used to study attention was introspection, except
for earlier isolate attempts to measure attention and one of the major debate of this period was
whether it was possible to split attention (i.e., to attend to two things at a time) or to attend to
something in a state of distraction8.
But unfortunately, while methods to measure attention were developing, the study of attention
as a mental process became marginalized by the rise of behaviourism and positivism.
Behaviourism’s principal advocates John Watson, was interested primarily in stimulus-
response relations, and therefore, confined attention to an operational concept defined in
terms of discriminative response to external stimuli9.
Interest in attention revived during the cognitive revolution of the 1940s, when engineers and
applied psychologists became involved in problems of man-machine interaction in various
military contexts. Gradually, the individual came to be viewed as a processor of information.
From this perspective, attention was conceived, in compliance with the principles of
information theory (Shannon 1948), as a function of the improbability of an event to happen
and of the frequency of similar past events (which provides a measure of the surprise value or
the degree of novelty). Thus an event that has never been experienced before has a high
surprise value and should attract attention, even if it lacks any specific associations or
consequences. This seems at odds with the diffused, even though paradoxical, idea that
8 As reminded by Hatfield ([1995] 1998), the first empirical works attempting to measure attention can be traced
back to Wolff (1738) or Bonnet (1755). Later one, Donders (1858), a Dutch ophthalmologist, provided one of
the first major advances in measuring attention while working on the anomalies of accommodation and
refraction on the eye (physiologic dioptrics), using mental chronometry. Pillsbury (1906) suggested three
methods for measuring attention: the first relied upon tests that measured performance of a task judged to require
a high degree of attention; the second measured diminished attention through decreased performance; and the
third gauged the strength of attention by the stimulus level required to distract the individual. In parallel,
Titchener (1908) identified seven laws that were empirically discovered by psychologists working on attention:
“clearness is an attribute of sensation”, “the law of two levels” – which accepts that clearness of one part-
contents of consciousness implies the decreased clearness of all the rest , the law of accommodation”, “the law
of prior entry”, “the law of limited range”, “the law of temporal instability” and “the law for measuring the
degree of attention” (see Hatfield, [1995] 1998). 9 Previous experiments between 1907 and 1910 by the Russian physiologists Pavlov and Bekhterev on dogs and
animals showed that the conditioned responses to stimuli included measureable signs of attention such as
pricked-up ears, head turned towards the stimulus, increased muscular tension, etc.
5
attention depends on both the unexpectedness of events and of their familiar association. This
drawback, together with the recognition by cognitive psychologists of the incalculable effect
of past experience on the information carried by any binary digit ultimately led them to
abandon information theory.
In modern psychology, traditional views have focused on selective attention10
, following
seminal experiments by Colin Cherry (1953) and Broadbent (1958) on dichotic listening:
subjects use a set of headphones to listen to two streams of words in different ears and
selectively attend to one stream. Attention was modeled as a selection filter and the main
research question was whether the selection filter operated before or after cognitive
processing (early vs. late selection models of attention11
).
Recent advances in imaging technology, particularly the development of functional magnetic
resonance imaging (fMRI) in the 1990s, have provided evidence of a neural correlate of
selective attention (Posner and Raichle, 1994) in agreement with former experiments
performed on monkeys in the 1960s12
.
In 1973, Kahneman developed a famous model of executive attention13
which broke with the
prevailing tradition of filter theories14
, by relying on the assumption that there is one central
10
Selective attention is often loosely defined. A few definitions from the literature are: “the differential
processing of simultaneous sources of information” (Johnson and Dark, 1986, p. 44); “a system of cognitive
processes that manages the burden of having too much to do at once by prioritizing among stimuli to be
processed” (Carr, 2004, p. 56); and “the generic term for those mechanisms which lead our experience to be
dominated by one thing rather than another’ (Driver, 2001, p. 53). Nowadays, one point of agreement is that
selective attention is a broad concept covering many distinct mechanisms operating in a variety of brain systems,
if not the entire system rather than one specific function or mechanism as some scientists maintain. For instance,
Posner (2004) localized this function in the “attentional organ system”, LaBerge (2004) in the “triangular
circuit” and McKnight (2007) in the synchronization of activity between prefrontal, parietal and mediotemporal
cortex. 11
Broadbent (1958) and Triesman (1969) conclude in favor of early selection models, showing that attention
shuts down or attenuates processing in the unattended ear before the mind can analyze its semantic content. At
the opposite, Deutsch and Deutsch (1963) support the late selection view by showing that the content in both
ears is analyzed semantically, even if the words in the unattended ear cannot access consciousness. Results like
that of MacKay (1973) posed problems for filters theories, by showing that even unconscious stimuli could be
processed to a high degree. For a survey on the early literature on attention in psychology, see Kahneman and
Triesman (1984). 12
For instance, Robert Wurtz, a neuroscientist specialized in physiology of the visual system at the National
Institute of Health began to record electrical signals from the brains of macaques trained to perform attentional
tasks in the beginning of the 70s. 13
The notion of executive attention is even more loosely defined that the one of selective attention. It is defined
by Posner and Rothbarth (1998) as “the regulation of thought, emotion and behavior.” (Posner and Rothbart,
1998, p. 1915). Norman and Shallice include planning, conflict resolution, decision-making, error correction,
and overcoming habitual responses to perform novel or difficult tasks as executive processes (Norman and
Shallice, 1986, pp. 2-3). The consensus seems that executive attention involves centralized supervisory control,
which and requires two important functions 1) information about and 2) causal influence over the things
supervised and controlled.
6
resource limited capacity for attention (based in the frontal cortex) for which all activities
requiring attention compete15
. It is to be noted that this model derives from Kahneman’s
well-known dual-task system based on the differentiation between endogenous (voluntary)
and exogeneous (involuntary/automatic) control in. In Kahneman’s words, voluntary attention
means that the subject attends to stimuli because they are relevant to a task that he has chosen
to perform (Kahneman 1973, p. 4), whereas involuntary attention is related to level of arousal,
which is largely controlled by the properties of the stimuli to which an organism is exposed.”
(p. 3). Kahneman’s model has been criticized on the ground that it involved a “homunculus
problem”: to wit, “a little man inside the brain” (Allport, 1980, p. 113) who directs attention.
For Stinson (2009), this homunculus problem16
is attached to all theories of attention when
top-down17
, or executive attention is thought of as a cause rather than an effect. Moreover,
Stinson argues that neither empirical evidence in neurosciences nor computational models
purporting to support causal executive theories of attention can set down the issue in a
14
See, for instance, the highly influential feature integration theory of Triesman and Gelade (1980). According
to this theory, attention binds different features of an object (e.g. color and shape) into consciously experiences
wholes. 15
Pashler (1998) summarises the empirical evidence obtained in attention psychology research under the term
controlled parallel processing, asserting that capacity limits and perceptual gating both characterize human
perceptual processing (Pashler 1998, p. 224). According to this author, many controversies in psychology
research result from the fact that some researchers identify the concept of attention with the allocation of a
limited processing capacity to a given set of items, while others relate attention to the selection of this set by a
gating mechanism. The gating mechanism implies that mental resources are allocated only to those items that
have passed the perceptual filter, while the rest is ignored. Wickens (1980) refers to Kahneman’s model as an
approach focusing on the ‘energetic’ side of attention as compared to filter theories that focus on its ‘selective’
side. As summarized by Ruz, “whereas selection theories aimed at localizing the point in the processing chain
(from perception to motor responses) at which irrelevant stimuli were filtered out (i.e., the location of the
‘bottleneck’), energetic views investigated how resources were divided among tasks or the unitary or multiple
nature of this ‘attentional energy’.” (Ruz, 2006, p. 499).
16 “The homunculus problem could more generally be attached to any explanation of how a mechanism achieves
a given ability that involves the assumption that some part of the mechanism has the ability.” (Stinson, 2009, p.
7) 17
Another distinction found in the psychological literature is between bottom-up and top-down approaches of
attention. Bottom-up attention is thought of as arising directly from outside stimuli (e.g. flashing lights, sudden
noises, or any stimulus that has either instinctive or learned importance, such as the sight of a predator, or the
sound of your name). These stimuli evoke stronger neural responses than less salient stimuli regardless of task,
environment, or training. Top-down attention is thought of as arising from internal stimuli such as memories and
thought.
But this distinction (like the distinction between early and late selection – see above) is somewhat troublesome
since 1) it is not enough for a stimulus to be right in front of your eyes for you to attend to it as the examples of
“inattentional blindness” (Rees, Russell, Frith and Driver, 1999) and “change blindness” (Rensink, O’Reagan
and Clark, 1997) exemplify; 2) like similar distinctions between automatic vs. controlled, stimulus-driven vs.
goal-directed, passive vs. active, and exogenous vs. endogenous, it has both literal and metaphorical meanings,
and could either imply direction of processing or level of automacity, although the two meanings do not always
match (Stinson, 2009, p. 139).
7
satisfactory way18
. If trying to define attention as a whole, and attempting localizing it as such
in the brain seems a fruitless approach, a decomposition strategy aiming at developing
taxonomy of attention at the appropriate level of explanation is potentially useful for
suggesting provisional definitions of what attention might be. For instance, in the taxonomy
provided by Posner and Fan (2004), attention is conceptualized as a system of different
anatomical areas that is composed by three distinct and specialized modules: the alerting
network; the orienting network and the executive network19
. For authors who conceive science
as a self-corrective enterprise, such decomposition can be used to support, modify or falsifies
proposed mental taxonomies of the mind. The problem is due to the fact that different
taxonomies of attention coexist. It is not problematic per se but the result is that the empirical
results could be very different. As an example, the relations between attention, working
memory and intelligence depend on the kind of attention that is used. Sustained attention is
significantly correlated with intelligence but divided attention is not (Schweizer and
Moosbruger, 2004, p. 330).
Attention is now viewed by some psychologists as functioning as networks connecting
distributed areas of the brain, although these “networks support not only the general functions
of attention common to all people, but also the individual differences that relate to aspects of
temperament and intelligences.” (Posner and Rothbart, 2007, p. 18).
In a nutschell, in recent years, there has been extensive research aimed at supporting the
production of mental taxonomy, with converging evidence coming from different domains
(psychology, psychophysiology, cognitive sciences, psychophysics, and so on)20
.
Let us no investigate how the notion of attention penetrated the field of economics.
18
Whether the study of the biological basis of cognition (thanks to the introduction of neuroimaging techniques
in particular) can be useful for the understanding of cognitive processes in general (or those involved by
attention in particular) is in itself a controversial issue. A first line of criticism argues that the understanding of
higher cognitive functions in the brain is impossible given the lack of modularity of these processes and the
nonlinear and dynamic nature of brain functioning (Uttal, 2001). A second line of criticisms claims that
cognitive processes are independent of its biological implementation, and thus the information about the brain is
not relevant to explain how cognition takes place (Fodor, 1999). 19
The alerting network is conceptually related to ‘energetic’ theories of attention and generates change in the
preparatory state of the organism in expectation of an incoming stimulus; the orienting network selects stimuli
from sensory input and involves both voluntary and automatic changes in the allocation of attention, while the
executive network monitors and resolves conflicts between different representations in the control of behavior.
20 Eye tracking as an example is used to analyze the way individuals read (and then learn to read) (Just and
Carpenter 1980; Baccino and Manunta, 2005) but also the effects of advertising (Pieters, Rosenberg and Wedel,
1999; Pieters, Wedel and Zhang , 2007) and more generally the relations between eye movements and
individuals’ behavior.
8
1.2. The diffusion of the notion of attention in economics and organizational
sciences
The beginning of the diffusion of the notion of attention into economics and
organizational sciences may be traced back to Herbert Simon.
Ocasio (1997), who is known for having developed an “attention-based view” of the firm,
refers to Simon’s early work on administrative behaviour (1947) and reminds that Simon’s
well-known ‘limited rationality’ assumption hinges on the limited attentional capability of
humans and serves as a justification for the existence of organizations and institutions as
means of orienting attention. As Simon wrote, “Organizations and institutions provide the
general stimuli and attention-directors that channelize the behaviors of the members of the
group, and that provide the members with the intermediate objectives that stimulate action.”
(Simon, 1947, pp. 100-101). Simon’s contribution is therefore characterized by a dual
emphasis on cognition (limited attention capacity) and structure (how organization shapes
individual’s attention). In later works, he anticipated some of the topical economic literature
devoted to attention allocation in information-rich environments (see e.g. Falkinger 2007
2008): “(…) in an information-rich world, the wealth of information (…) creates a poverty of
attention and a need to allocate that attention efficiently among the overabundance of
information sources that might consume it.” (Simon, 1971, p. 40).
Simon’s influence first penetrated the field of organization theory, where the concept of
attention has a long history and tradition (see Festré and Garrouste 2012). Different authors
have stressed different aspects of attention allocation and structuring, but not in a unified
perspective. In particular, they have emphasized either attention as shaped by routines and
bounded rationality (March and Simon, 1958; Cyert and March, 1963), or alternatively, how
attention as loosely coupled through enactment processes (Weick, 1979) and organized
anarchy (Cohen, March and Olsen, 1972). But in the process, as pointed out by Ocasio, “the
effects of the social structure on the channelling and distribution of decision-makers’ attention
have been greatly deemphasized if not entirely ignored.” (Ocasio, 1997, p. 188). Ocasio
(1997) tries to restore this important feature of Simon’s contribution by developing an
explanation for firm behaviour based on the structuring of organizational attention.
Organization attention processing and regulation is shown to be the result of three principles:
at the level of individual cognition, the principle of focus of attention links attentional
processing to individual cognition and behaviour; at the level of social cognition, the principle
9
of situated attention highlights the importance of the situational context in explaining what
decision-makers attend to; at the organizational level, the principle of structural distribution of
attention builds explain how the firm’s economic and social structures regulate and channel
issues, answers, and decision-makers into the activities, communications, and procedures that
constitute the situational context of decision-making.
Rerup (2010) extends Ocasio’s framework by focusing not only on top-down senior
management processes in directing attention but also on their synchronization with bottom-up
processes, which are ignored by Ocasio’s approach. This “synchronized prospective
attention” (as he calls it) is of prime importance when non-salient but potentially very
damaging threats are involved in organizations. These situations are characteristic of the
health care sector (Madsen et al. 2006), of military or intelligent activities (Baker and Hulse,
2009), or of air traffic control, were organizations need to swiftly allocate attention to
emerging issues.
Research on visual attention using eye tracking techniques21
has also been a source of
inspiration for management sciences in general and marketing in particular. Pieters and
Warlop (1999) analyse the impact of time pressure and task motivation on visual attention
during brand choice. First, they show that consumers with high task motivation filter brand
information less and pictorial information more. Second, they show that consumers under
time pressure filter textual ingredient information more, and pictorial information less. Those
results have interesting implication for packaging and shelf lay-outs strategies.
Pieters, Rosenberg and Wedel (1999) address attention wear-out and the impact of repetition
on advertising effectiveness using eye-tracking methodology and scanpath theory22
. Their
findings confirm that attention duration drops over repeated exposures to advertisements and
suggest that when consumers can control exposure duration themselves, such as with print or
electronic advertising, they adapt exposure duration to limit satiation. In a related study,
Pieters and Wedel (2007) test whether consumers can control their visual attention to
21
Major contributors to visual attention are LaBerge (1983) and Eriksen and St James (1986). La Berge was
inspired by the work of William James and developed the so-called “spotlight” model, which describes visual
attention as having a focus, a fringe, and a margin. Eriksen and St James developed a second model, called the
“zoom-lens” model, which extends the spotlight model by adding the property for attention to be changing in
size. Michael Posner (Op. Cit) is also known for his seminal work in the 1990s on selective visual attention. 22
Scanpath theory (Noton and Stark 1971, Stark 1994) postulates relatively stable patterns of eye fixations. In
the context of print advertising, those features facilitate identification of the advertisements’ content in repeated
exposures.
10
advertising with processing goals23
and a free-viewing condition. They show that an ad-
memorization goal enhances attention to the body text, pictorial and brand design objects,
whereas a brand-learning goal enhances attention to the body text but simultaneously inhibits
attention to the pictorial design. Those results supports the thesis that ad informativeness and
attention is goal contingent rather than a dumb process guided by perceptual salience of the ad
stimuli only. In the same vein, Orquin (2011) applies eye tracking techniques and provides
insights for designing product packages so as to catch attention of consumers on supposedly
relevant features such as health cues for instance.
Robert Lanham24
(2006), who attempts to trace the intellectual roots of what he calls the
“economics of attention”, also refer to Gregory Bateson and Friedrich von Hayek as forunners
of the ‘economics of attention’ (for a more precise history of economic thought account of the
notion of attention, see Festré and Garrouste, 2012) . On the one hand, Bateson (1972)
insisted on the scarcity of conscious attention, an economy he called ‘systemic awareness’.
On the other hand, Sensory Order (1952), Hayek defines attention as a “state of excitatory
preparedness”, which is not restricted to the conscious level (it can be involuntary) and which
is of pecular importance for permitting “a social or conventional representation of the world
which [the individual] share with his fellows.” (Hayek, 1952, p. 140 and p. 142).
Let us now investigate how the notion of attention is dealt with in current economic analysis.
2. The “economics of attention”: The state of the art
Very broadly, one can distinguish between two different approaches of attention economics.
On the one hand, attention economics is considered as a ramification of information
economics which derives from Shannon’s mathematical theory of communication (Shannon
1948). This approach assumes full rationality and deals with sub-optimalities caused by
asymmetric information and information overload. Key empirical issues relate to information
pollution and its solutions (market-based mechanisms, institutional or regulatory devices). On
the other hand, attention economics also refers to economic approaches that characterize
limited attention as a justification for near-rational or bounded rational behaviors.
23
Those processes include two learning goals (ad-memorization and brand learning), one appreciation goal and
one evaluation goal. 24
Robert Lanham is Professor emeritus of English literature at UCLA. His book The Economics of Attention is
about the move from an economic system based on things and objects to an economics of attention where the
central commodity is not stuff but style, i.e., what he labels fluff, for style is what competes for our attention
amid the din and deluge of new media in order for us to make sense of overflowing information.
11
2.1. Attention economics as a ramification of the economics of information
According to this approach, “attention economics” is conceived as a ramification of the so-
called “economics of information and networks” (cf. Varian and Shapiro 1999). From this
perspective, the specific questions raised by the attention economy are amenable to standard
economic analysis. Attention is described as a scarce good that is likely to be depleted due to
an overload of information. This implies that the real value that is brought by an information
provider is given by its capacity to localize, to filter and to communicate the relevant
information to users. It is no coincidence that most successful websites are Internet search
engines since those websites allow users to find the most relevant information while avoiding
all the rest of non useful information. For instance, the success of Google lies in precise
assignment of advertisement links to the context of the keywords that are searched by the
user. Briefly, from this perspective, attention economics is about the interplay of attention and
information, and discuss the various possibilities of information providers to particularize
information in order to catch users’ attention. Business strategies of price or product
differentiation such as price discrimination (personalized price or preferably group pricing
due to the existence of network externalities, switching costs and product sharing) or product
differentiation (e.g. providing two versions of the same information good in order to favor
self-selection of consumers) provide ways to capture attention. In other words, more and more
detailed and precise methods of acquisition of information on the user’s needs, and
consequent exact targeting of the advertising are a key to successful marketing strategies. In a
nutshell, the objective is not only to attract the attention of the user but also to give him/her
with higher utility providing him with more relevant information, i.e., to pay attention to
him/her. Amazon.com provides a good illustration of the twofold perspective of “catching the
attention on something or somebody” on one hand, and on “paying attention to someone” on
the other.
Some of the features of the website are indeed dedicated to make clients feel they are paid
attention to: e.g., personalized services such as historical record of personal account, updates
sent via e-mails, twitter or text, recommendations, polls, discussion forums, etc. Some others,
by contrast, are clearly intended to catch the attention of clients: e.g., hits, free trials of
services, free applications, deals of the day, shopping and shipping facilities, etc.
12
The fact that attention is becoming a rare resource has dramatic empirical consequences for
information users. An important literature looks indeed at the problem raised by the explosion
of electronic interactions and particularly to development of web spam. It is costly for the
receiver to open spam just because first he does not know ex ante if the message he opens is
or not a spam, and second he needs to mobilize, perhaps loosely his attention on the message.
There is then an asymmetry of information between the sender, who knows the contents of the
message and the receiver, who does not. Typically, this situation is a case of externality,
whereby information pollution is imposed by the sender of the message to the receiver. Three
main solutions – namely, technological, institutional or market-based – have been proposed to
reduce the welfare losses induced by spams. The two first are intuitive, trying to set up anti-
spam filters for the first and enforcing laws for the second25
. The third one includes stamps
(Kraut et al. 2002 2005), surcharges on communications and auctions (Zandt, 2001) or
attention bond mechanism (Loder, Van Alstyne and Wash, 2004). Market-based solutions
relates to Ronald Coase’s (1960) ideas to control externalities. They are either based on
experiments that are design to test whether charging a price for sending electronic mails could
have a disciplinary effect on senders or/and whether it may inform recipients about the value
of a message to the sender before they read it (Kraut et al. 2005). Zandt (2001) discusses the
potential benefit of implementing mechanisms for allocating attention such as surcharges on
communications and auctions. He shows that the mechanisms increase the cost of sending
messages and shift the task of screening messages from the receivers to the senders. An
increase in the supposedly low communication cost benefits most (but not all) receivers. By
contrast it is beneficial to receivers only if this tax is redistributed to them by lump-sum
transfers to receivers or if the sender’s information about the receivers is accurate. Loder, Van
Alstyne and Wash (2004) shows the superiority of the Coasian solution of individual
negotiation over the worth of a given message (e.g. the information known to the sender
rather than the content of the message) rather than a unilateral decision by a controlling party
in presence of information asymmetry. Even if such negotiation itself however consumes
attention and carries with it an attention cost, in certain cases, recipients can be better off than
even a cost-free perfect filter. In this model, the attention cost consists in ‘attention bonds’
that play the role of screening devices.
Some other works like the one of Huberman and Wu (2007) try to understand how attention
propagates and eventually fades away as a result of collective action.
25
According with Lodor, Van Alstyne, and Wash (2004), the laws are difficult to enforce, in particular because
the spammers are very much fly-by-night creatures.
13
In sum, it is interesting to note that the economics of attention seen as a ramification of
information theory conveys two conflicting rationales for economic agents, depending on
whether it focuses on the user or the provider of information: on one side, there are economic
and management models that analyze how it is possible for firms to capture the attention of
customers or audiences in order to make money from it; on the other side, one finds analyses
that focus on the overload of information from the viewpoint of consumers and provide
solutions in order to protect the attention of users from information overload and pollution.
Kessous, Mellet and Zouinar (2010), who adopt an economic sociology perspective, point out
this discrepancy in the literature and interpret effective innovations in the digital economy as
attempts to reconcile customer relationship (CRM26
) and vendor relationship (VRM27
)
management practices.
As already mentioned, the economic literature on attention also includes approaches that
borrow from cognitive psychology and characterize limited attention as a justification for
near-rational or bounded rational behaviors.
2.2. Attention and ‘bounded’ rationality
The other strand of literature on attention economics is tightly related to the heritage of
Herbert Simon. As well known, this heritage has given rise to two different interpretations
depending on which part of the work of Simon is focused on: the pars destruens, criticizing
neoclassical view, or the pars construens, consisting of an attempt to model behavior in a
more realistic way (cf. Rizzello 1999).
26
CRM is a widely implemented model for managing a company’s interactions with customers, clients, and
sales prospects. It involves using technology to organize, automate, and synchronize business processes—
principally sales activities, but also those for marketing, customer service, and technical support. The overall
goals are to find, attract, and win new clients; nurture and retain those the company already has; entice former
clients back into the fold; and reduce the costs of marketing and client service
27 AttentionTrust provides a good example of VRM practices. It consists of a set of principles to govern the
attention economy on the self-ownership of the data we create, and specialized software to regulate their use.
Specifically, AttentionTrust believes that we all have the right 1) to own at least a copy of our data, 2) to store
that data where we want and move it when we want, 3) to exchange it for something of value to us, and 4) to
know what others intend to do with our data, so that we can make informed decisions about who should have
access to it. (http://www.attentiontrust.org/blog). More generally, VRM is a category of business activity made
possible by software tools that provide customers with both independence from vendors and better means for
engaging with vendors. The term was coined by Mike Vizard on a Gillmor Gang podcast on September 1, 2006,
in a conversation with Doc Searls about the project Searls had recently started as a fellow at the Berkman Center
for Internet & Society at Harvard University. It was conceived as the necessary complement of CRM.
14
According to the first interpretation, bounded rationality is seen as a limitation to human
rationality. This is the line privileged by Kahneman and Tversky in the debate on heuristics
and bias when they considered that experimental findings represented deviations from the
norm of rationality conveyed by expected utility theory. By contrast, the second interpretation
implies that bounded rationality is seen as an adaptive capacity. This conception is endorsed
by the stream on ‘ecological rationality’ (Smith, Nobel Lecture 2002; Gigerenzer and Todd
1999) according to which fast, information-economizing and frugal heuristics based on salient
rules can be efficient means of reasoning28
. In such a perspective, rationality is contingent to
the institutional environment and can only be measured in an evolutionary perspective.
To be sure, the emerging macroeconomic literature on rational inattention we have hinted at
in the introduction is clearly to be related to the first interpretation. But, unlike former
attempts in terms of adaptive expectations, assuming rational inattention or limited attention
provides microfoundations for economic behavior that look enough like the familiar rational
expectation assumption to ensure usefulness and tractability, while the implications for policy
are different enough to be interesting (Sims 2003, p. 1). For instance, Akerlof, Dickens and
Perry (2000) show that assuming near-rational wage and price setting in macroeconomic
modeling does not impair the robustness of the results and is consistent with some empirical
findings. On the other hand, the assumption of limited attention is based on observations that
have been documented by Shiller (1997): people usually misperceive effective real (as
opposed to nominal) changes either because inflation is low and therefore, not a matter of
focal awareness or because their attention is focus on local concerns and therefore, not taking
into account pay available to them in alternative jobs contrary to what general equilibrium
theory postulates they do (Shiller, 1997, pp. 31-32). Shafir, Diamond, and Tversky (1997)
reach similar conclusions. In one vignette, which they related to respondents, these authors
draw a contrast between Ann, who receives a 2 percent nominal salary increase at zero
inflation, and Barbara, who gets a 5 percent nominal salary increase at 4 percent inflation.
Most respondents correctly considered that Ann would be better off economically, but they
28
The « heuristics and biais » program of Kahneman and Tversky (cf. Tversky and Kahneman, 1974) refers to a
conception of rationality that permits to preserve Savage’s (1954) theory of choice under uncertainty and
founded behavioural economics, which may be described as “a set of exceptions that modifies but leaves intact
the canonical model of rational choice, not least since it is irrational to suppose that people in general behave
irrationally.” (The Economist, 29-04-2006).
On the other hand, the “fast and frugal heuristics” program (Gigerenzer and Goldstein 1996) violates
fundamental tenets of classical rationality. In particular, the assumption that individuals neither look up nor
integrate all information conveys a context-dependent conception of rationality that Vernon Smith will later label
‘ecological rationality’, which refers to the effectiveness of a behavioral rule within its ecological context
(Vernon Smith’s Nobel Lecture 2002).
15
also said that Barbara would be happier and less likely to leave her job. In a slightly different
way Reis (2006b) assumes that producers29
face costs of acquiring, absorbing and processing
information. “When the producer does obtain information, conditional on it he or she decides
whether to set prices or quantities, which price to charge or which quantities to sell for the
duration of the plan, and next to plan.” (Reis, 2006b, 795). Those assumptions and findings
have several important implications: First, they imply that a not too low positive rate of
inflation should permit a higher level of employment to be sustained, at a cost which would be
rather small. Second, they suggest that if inflation increases, the costs of being less than
perfectly rational about it should also rise, inducing people to switch their behavior to take
inflation into full account. And third, if higher satisfaction at low rates of inflation leads to
higher morale, less shirking, higher productivity, and less turnover, then firms face a different
efficiency wage constraint at low rates of inflation than they face at either zero inflation or at
high rates of inflation, when worker’s attitudes toward inflation may become more rational.
Therefore, there should be a positive but low optimal rate of inflation that minimizes the
sustainable level of unemployment.
In the same vein, Falkinger (2008) develops a general equilibrium model based on empirical
research comparing information-rich and information-poor economies. Explicit reference to
Simon’s work is made. In particular, Simon’s idea that information wealth implies a poverty
of attention is further explored by using a framework where consumers are conceived as
passive signal receivers whereas information providers are seeking to catch their attention by
sending messages. Falkinger also refers to Kahneman’s dual-task approach by considering
that individuals are endowed with a limited mental capacity. How they (voluntarily) process
an additional signal depends on the spare capacity left after the load imposed by exposure to
other signals. Moreover, there exists a minimum (marginal) strength of a message in order for
it to be perceived by the consumers. When total signal exposure lies below a certain level,
there is no interference between different signals. Beyond this point, capacity limits lead to
such interference. Falkinger concludes that information-rich economies characterized as of
lacking enough attention (contrary to information-poor economies) reach an inefficient
equilibrium due to attention-seekers engaging in wasteful signaling in the competition for
attention. In addition, Falkinger notes that there may be consequences for welfare to the
extent that the set of information attended to in information-rich economies is not guaranteed
to be optimal.
29
In Reis (2006a) the consumers are considered as having a limited attention.
16
The second interpretation of limited attention derived from bounded rationality is embodied in
a second series of theoretical and experimental developments, which focus on attention
allocation in problem solving and stress the importance of processes in decision making. The
experimental contributions (see Camerer et al. 1993, Camerer and Johnson 2004, Costa-
Gomes 2001 2006, Gabaix et al. 2006) use the ‘Mouselab’ programming language to measure
subjects’ information acquisition. Information is hidden behind boxes on a computer screen
and subjects have to use the computer mouse to open (or close) the boxes in order to get
(costly) information that helps solving a problem (of income maximization) in a given limited
period of time. On the one hand, Mouselab records permit to know the order and duration of
information acquisition. On the other hand, since one screen box can be open at any time, it is
possible to know what information is acquired on a second-by-second basis throughout the
experiment. Gabaix et al. (2006) provide a step further by testing a theoretical process-based
model of cognition based on partially myopic cost-benefit calculations which they label the
Directed Cognition (DC) model (Gabaix and Laibson 2005). This model predicts rather well
experimental findings using the Mouselab technology. However, experiments also reveal a
deviation from the DC model by supporting the existence of some heuristics like the “box
heuristic”, namely, the tendency for subjects to become more and more likely to end an
analysis of a problem the more boxes they open holding fixed the economic benefit of
additional analysis. This means that to a certain extent, subjects display a partial insensitivity
to the particular circumstances of the problem they face, a cognitive bias similar to what
Camerer and Lovallo (1999) have labeled “system neglect”.
This literature also parallels earlier work on the notion of accessibility and salience by
Kahneman. In the Kahneman’s dual cognitive system based on the distinction between
intuition (system 1) and reasoning (system 2)30
, accessibility, i.e., “the ease with which
particular mental contents come to mind” (Higgins 1996 quoted by Kahneman in his 2002
Nobel Lecture, Kahneman 2003, p. 1452) is conceived as cumulative: experimental evidence
shows that the more a person acquires information and competence in a particular domain, the
more he (or she) becomes able to recall and use part of his knowledge. In Kahneman’s own
terms: “The acquisition of skill selectively increases the accessibility of useful responses and
of productive ways to organize information. The master chess player does not see the same
board as the novice, and the skill of visualizing the tower that could be built from an array of
30
As noted by Egidi (2012, p. 205), this distinction was first introduced by Schneider and Shiffrin (1977).
17
blocks could surely be improved by prolonged practice. (Kahneman in his Nobel Lecture,
Kahneman 2003, p. 1453). This implies that accessibility has different levels and that some
operations demand more mental efforts than others. Moreover, accessibility is largely
dependent on salience, especially in the intuitive ‘system 1’:
“Physical salience also determines accessibility: if a larger green letter and a small blue
letter are shown at the same time, ‘green’ will come to mind first. However, salience can
be overcome by deliberate attention: an instruction to look for the smaller letter will
enhance the accessibility of all its features” (Kahneman, Nobel Lecture 2002, 2003, p.
1453).
From this quotation we understand that salience is a key feature of accessibility but that it
may easily be manipulated by directing attention to specific features that either give access or
hide others. In the Gorilla experiment of Simons and Chabris (1999), people are told to count
the number of passes between players wearing white. The results of this experiment suggest
that the likelihood of noticing an unexpected object (here the Gorilla), depends on the
similarity of that object to other objects in the display and on how difficult the priming
monitoring task is. One could imagine an experimenter to tell slightly different instructions,
e.g. to count the number of passes between players wearing black instead of white T-shirts
and see whether the similarity in terms of color (black) between the Gorilla and the T-shirts
enhances the accessibility to the Gorilla or not. Another variant of the Gorilla experiment has
been made using ‘subliminal priming’ of people to race by showing them stereotypically
black and white names. When subsequently shown the ‘invisible gorilla’ video, “only 45% of
the participants exposed to the White names noticed the gorilla. But 70% of the participants
who saw the Black names noticed the gorilla.”31
In sum, Kahneman’s concept of accessibility is related to the notion of stimulus, salience,
selective attention, and response activation or priming.
Finally, salience is not a purely individual characteristic. It also happens at the collective level
as the game “target the two” of Cohen and Bacdayan (1994) and Egidi and Narduzzo (1997)
as well as experiments by Mehta, Starmer and Sugden (1994) illustrate.
In the next section, we suggest a research agenda that derives from this promising strand of
the literature.
31
http://www.stanford.edu/group/gender/cgi-bin/wordpressblog/2011/07/the-continued-dehumanization-of-
blacks/
18
3. Research agenda on the “economics of attention” and conclusion
The surveyed literature on the economics of attention shows clearly that there does not exist a
unified theoretical framework in order to deal with the notion of attention in economics. In
this section, we attempt to define a research agenda for future developments on the role of
attention in economic decisions by focusing on three different levels: individual,
organizational and social.
3.1. At the individual level
A preliminary distinction needs to be made between ‘paying attention to someone’ and
‘paying attention to something’. In the first case and in compliance with the theoretical
literature on others-regarding preferences, individuals are no more supposed to be indifferent
to others. Moreover, as evidenced by experiments on bargaining games, the level of
generosity of agents is context-dependent (see e.g. Levitt and List 2007 for a comparison
between laboratory and field experiments). By the same token, it could be conjectured that the
attention that people pay to others varies according to the setting (competitive vs. cooperative)
or the social distance (akin vs. stranger). In the case of paying attention to something and
assuming limited attention, it is important to know first, what is the extend of the attention
scarcity and second, how individuals deals with it. The first question is linked to the idea that
individuals, as in Camerer and Johnson (2004), do not search for the same information
because they vary in the way they solve a problem. The second question concerns the variety
of alternative uses of a given information depending on the problem that is faced.
Several directions of research follow from these questions. A first line of research could be to
explore the various ways an individual pays attention to somebody or to something according
to different parameters. As an example, it is possible to run experiments that make people
competing or cooperating and investigate whether it has an impact on the strength of their
attention to others. In order to test for the strength, it would be necessary to run experiments
where the degree of social distance between players can be controlled (in terms of gender, age
and activity). A possible treatment could consist in matching a group of old people with a
group of young people. A second direction could be to identify and measure different kinds of
attentional determinants. For instance, one can consider that attention paid to something
depends on the nature of the problem to be solved, the type of performance index, the salience
of a signal and the emotional context. As for the first determinant, the replication of Camerer
19
and Johnson (2004)’s experiments could be a means to test for the type of problem to be
solved. As for the second, it could be interesting to run experiments where the elapsed time
and, alternatively, the correctness of the answer given to a problem would constitute the
performance indices. As for the third, the question amounts to evaluate how strong a signal
must be in order to have an impact on behavior and how it competes with other signals. In
essence, this would provide an empirical test of Falkinger (2008) model which involves the
determination of a minimum of the strength of a signal in order for the information to be
perceived by the consumers. Finally, it could be interesting to analyze the relationships
between emotion and attention. For instance, experiments using trash vs. sweet stimuli before
subjects play a given game could be run.
Ultimately, these investigations should contribute to increased knowledge of relevant
dimensions of attention at the individual level. It could possibly lead to the definition of an
individual’s utility function that takes into account the fact that attention is bounded and that
its strength and direction depend on a set of factors that are possible to identify by means of
controlled experiments.
3.2. At the organizational level
The implications of attention scarcity for firm structure are linked with how attention
coordination of heterogeneous individuals’ attention happens. Because cues have asymmetric
salience and are interpreted differently (see Rerup, 2010), it is important to analyse 1) the
way(s) individuals converge in terms of the attention they pay on the same or different
information and 2) how they succeed in coordinating their interpretation in order to take a
common decision.
Accordingly a first direction could be to study the way individuals pay attention to the same
information, in what context they pay an equal or unequal attention, and the way they give
attention to complementary information assuming that they have to take a common decision.
Experiments could be run, where first individuals have the same sets of information in terms
of price and quality of a good and have to decide collectively whether or not to buy it and
second, they have sets of information concerning either the price or the quality of a good and
have to decide collectively whether or not to buy it.
20
Another perspective of research could be to look at the way individuals’ attention converges
towards a solution when these individuals have to coordinate their actions. Accordingly
people would have to play games with different sets of information and different ways of
evaluating their performance. As in a moral hazard model, people have private information
and one can investigate 1) the conditions under which an optimal contract can be proposed by
a principal to his/her agents; 2) whether the principal is induced or not to screen hidden
actions; and 3) if the agents tend or not to signal their information if they may benefit from
this signaling. In these experiments, attention scarcity would be assumed by introducing a
limited time for subjects to decide.
3.3. At the social level
Unlike the individual and organizational levels, at the social level, individuals are not
consciously willing to take a collective action. They only undertake to solve a problem of
coordination. There is now an important literature on focal points and salience (Schelling,
1978; Bacharach and Bernasconi, 1997; Sugden, 1995, 2011) in order to explain the
emergence of a solution when facing a coordination problem. Basically the idea is to explain
how people solve social dilemma that are characterized by the absence of equilibrium (i.e. the
fashion game played sequentially) or by the presence of multiple (i.e. the pure coordination
game) or sub-optimal equilibrium (i.e. the prisoner dilemma). The objective would be here to
test the theoretical results that this literature has produced. As an example, it could be possible
to use pure coordination games where some information is added in order for individuals to
discriminate between different possible solutions. Another possibility would be to test for the
emergence of a mixed equilibrium in a battle of sexes game when the information sets are
given to people playing the game. This is indeed not far from Bacharach and Bernasconi
(1997) experiments of the Variable Frame Theory of focal points in matching games.
Another line of research could be to combine explanations given by economists and other
social scientists in order to explain the convergence of individuals’ attention toward collective
attention. In social philosophy for instance there are recent works due to Gilbert (1989) or
Tuomela (2000) that try to explain the emergence of collective action by considering that
“collective action problems typically have the structure of a Prisoner's Dilemma game or a
Chicken game” (Tuomela, 2001, p.3). From a different perspective, sociologists emphasize
that joint attention is a mental condition for interactive cooperation to emerge. Accordingly it
21
might be interesting to compare and try to integrate both explanations given by sociologists
and economists of the emergence of collective action as based on collective attention.
Acknowledgments
We thank warmly Roger Koppl for his comments and suggestions on an early version of this
chapter presented at the Annual Conference of the Society for the Development of Austrian
Economics held in Washington DC, 19-21 November 2011.
22
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