Attention allocation and input proportions

Abstract This paper presents an alternative to the standard microeconomic analysis of the effects of a change in relative input prices. Managers are portrayed as struggling to control costs. Because a rise in the price of a given input ‘promotes’ operations intensive in that input in the managerial attention priority list, it induces tighter control of such operations and thus a lower relative utilization of the input. The deterministic model analyzed is akin to stochastic models studied by Radner and Rothschild.