Behavioral Implications of Information-Processing Frictions*

Program:            H2020, ERC Consolidator Grant
Granting Body:    European Commission
Contract No.:      770652
Coordinator:       Jakub Steiner**
Starting Date:     01/06/2018
Ending Date:       01/06/2023


BEHAVFRICTIONS will use novel models focusing on information-processing frictions to explain choice patterns described in behavioral economics and psychology. The proposed research will provide microfoundations that are essential for (i) identification of stable preferences, (ii) counterfactual predictions, and (iii) normative conclusions. (i) Agents who face information-processing costs must trade the precision of choice against information costs. Their behavior thus reflects both their stable references and the context-dependent procedures that manage their errors stemming from imperfect information processing. In the absence of micro-founded models, the two drivers of the behavior are difficult to disentangle for outside observers. In some pillars of the proposal, the agents follow choice rules that closely resemble logit rules used in structural estimation. This will allow me to reinterpret the structural estimation fits to choice data and to make a distinction between the stable preferences and frictions. (ii) Such a distinction is important in counterfactual policy analysis because the second-best decision procedures that manage the errors in choice are affected by the analyzed policy. Incorporation of the information-processing frictions into existing empirical methods will improve our ability to predict effects of the policies. (iii) My preliminary results suggest that when an agent is prone to committing errors, biases--such as overconfidence, confirmatory bias, or perception biases known from prospect theory--arise under second-best strategies. By providing the link between the agent's environment and the second-best distribution of the perception errors, my models will delineate environments in which these biases shield the agents from the most costly mistakes from environments in which the biases turn into maladaptations. The distinction will inform the normative debate on debiasing.


Jeffrey Ely, Andrea Galeotti, Ole Jann, and Jakub Steiner. 2021. “Optimal test allocation.” Journal of Economic Theory,193 (April): 105236. Repository:

Jeffrey Ely, Andrea Galeotti, and Jakub Steiner. 2021. “Rotation as Contagion Mitigation.” Management Science 67(5): 3117-3126. Repository:

Andrea Galeotti, Jakub Steiner, and Paolo Surico. 2020. “Merit of Test: Perspective of Information Economics.” Health Policy and Technology 9.4. 575-577. Repository:

Olivier Gossner, Jakub Steiner, and Colin Stewart. 2021. “Attention Please!” Econometrica 89(4): 1717-1751. Repository:

Gossner, Olivier, and Jakub Steiner. 2018. “On the Cost of Misperception: General Results and Behavioral Applications.” Journal of Economic Theory, 177(September): 816–847. Repository:

Matysková, Ludmila, Brian Rogers, Jakub Steiner, and Keh-Kuan Sun. 2020. “Habits as Adaptations: An Experimental Study.” Games and Economic Behavior, 122(July): 391–406.

Philippe Jehiel, Jakub Steiner, "Selective Sampling with Information-Storage Constraints." Forthcoming. The Economic Journal. Repository:


*This project has received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme (grant agreement No 770652).

** Jakub Steiner's personal website: