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Imperfect Attention and Menu Evaluation

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  • Paola Manzini

    ()
    (University of St Andrews and IZA)

  • Marco Mariotti

    ()
    (University of St Andrews)

Abstract

We model the choice behaviour of an agent who is vNM rational but imperfectly attentive. We define inattention axiomatically through preference over menus and endowed alternatives: an agent is inattentive if it is better to be endowed with an alternative a than to be allowed to pick a from a menu in which a is is the best alternative. This property and vNM rationality imply that the agent notices each alternative with a given menu-dependent probability (attention parameter) and maximises a menu independent and deterministic utility function over the alternatives he notices. Preference for flexibility restricts the model to menu independent attention parameters as in Manzini and Mariotti (2014). Our theory explains anomalies (e.g. the attraction and compromise effect) that Random Utility Maximisation cannot accommodate.

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Bibliographic Info

Paper provided by Department of Economics, University of St. Andrews in its series Discussion Paper Series, Department of Economics with number 201319.

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Date of creation: 21 Oct 2013
Date of revision: 24 Aug 2014
Handle: RePEc:san:wpecon:1319

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Keywords: bounded rationality; stochastic choice;

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  1. Piccione, Michele & Rubinstein, Ariel, 1997. "On the Interpretation of Decision Problems with Imperfect Recall," Games and Economic Behavior, Elsevier, vol. 20(1), pages 3-24, July.
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  9. Kreps, David M, 1979. "A Representation Theorem for "Preference for Flexibility"," Econometrica, Econometric Society, Econometric Society, vol. 47(3), pages 565-77, May.
  10. Sims, Christopher A., 2003. "Implications of rational inattention," Journal of Monetary Economics, Elsevier, Elsevier, vol. 50(3), pages 665-690, April.
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  13. Ortoleva, Pietro, 2008. "The Price of Flexibility: Towards a Theory of Thinking Aversion," MPRA Paper 12242, University Library of Munich, Germany.
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