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Assessing axioms of theories of limited attention

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  • Rochanahastin, Nuttaporn

Abstract

It is very likely that many decisions made by individuals are made without a complete or exhaustive deliberation process. One of the plausible explanations for this behaviour, that has recently received much recognition in economics, is that people have limited attention. This assumption has motivated many new theories, which are increasingly founded on axioms. This research experimentally tested two of these theories, those of Masatlioglu, Nakajima and Ozbay (2012) and Lleras Masatlioglu Nakajima and Ozbay (2017), which are based on the revealed preference framework and are built on axioms which are weakenings of the Weak Axiom of Revealed Preference (WARP) ̶ the standard axiom of preference theory. This paper uses standard choice data to determine the (relative) validity of their underlying axioms, compared to a benchmark of the violation rate given by random behaviour. WARP(LA) (Masatlioglu et al. (2012)) results in fewer violations, though LC-WARP (Lleras et al. (2017)) has higher correct prediction rates.

Suggested Citation

  • Rochanahastin, Nuttaporn, 2020. "Assessing axioms of theories of limited attention," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 84(C).
    • Handle: RePEc:eee:soceco:v:84:y:2020:i:c:s2214804318305342
    DOI: 10.1016/j.socec.2019.101499
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    More about this item

    Keywords

    Experiments; Limited attention; Revealed preference; Axioms;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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