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Rational inattention and revealed preference: The data-theoretic approach to economic modeling

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  • Caplin, Andrew

Abstract

Beliefs have as pervasive a role as utility functions in economic models of choice, and are no more visible to the naked eye. This suggests the value of a data-theoretic approach to imperfect information along the lines of Samuelson's “revealed preference” approach to utility maximization. I introduce a recently developed approach of this nature (Caplin and Martin, 2013a; Caplin and Dean, 2013a, 2013b). I highlight the broader potential of the data-theoretic approach to answer questions of an inter-disciplinary nature and to discipline an oncoming flood of behaviorally-relevant data.

Suggested Citation

  • Caplin, Andrew, 2014. "Rational inattention and revealed preference: The data-theoretic approach to economic modeling," Research in Economics, Elsevier, vol. 68(4), pages 295-305.
  • Handle: RePEc:eee:reecon:v:68:y:2014:i:4:p:295-305
    DOI: 10.1016/j.rie.2013.09.001
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    References listed on IDEAS

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    26. Andrew Caplin & James H. Carr & Frederick Pollock & Zhong Yi Tong & Kheng Mei Tan & Trivikraman Thampy, 2007. "Shared‐equity mortgages, housing affordability, and homeownership," Housing Policy Debate, Taylor & Francis Journals, vol. 18(1), pages 209-242, January.
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