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Stochastic Choice and Consideration Sets

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  • Paola Manzini
  • Marco Mariotti

Abstract

We model a boundedly rational agent who suffers from limited attention. The agent considers each feasible alternative with a given (unobservable) probability, the attention parameter, and then chooses the alternative that maximizes a preference relation within the set of considered alternatives. We show that this random choice rule is the only one for which the impact of removing an alternative on the choice probability of any other alternative is asymmetric and menu independent. Both the preference relation and the attention parameters are identified uniquely by stochastic choice data.

Suggested Citation

  • Paola Manzini & Marco Mariotti, 2014. "Stochastic Choice and Consideration Sets," Econometrica, Econometric Society, vol. 82(3), pages 1153-1176, May.
  • Handle: RePEc:wly:emetrp:v:82:y:2014:i:3:p:1153-1176
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    File URL: https://doi.org/10.3982/ECTA10575
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    References listed on IDEAS

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    Cited by:

    1. Andrew Caplin & Mark Dean, 2015. "Revealed Preference, Rational Inattention, and Costly Information Acquisition," American Economic Review, American Economic Association, vol. 105(7), pages 2183-2203, July.
    2. Manzini, Paola & Mariotti, Marco, 2013. "Imperfect Attention and Menu Evaluations," SIRE Discussion Papers 2013-98, Scottish Institute for Research in Economics (SIRE).
    3. Karpov, Aleksandr, 2017. "Price competition and limited attention," Economics Discussion Papers 2017-89, Kiel Institute for the World Economy (IfW).
    4. Helmers, Christian & Krishnan, Pramila & Patnam, Manasa, 2015. "Attention and Saliency on the Internet: Evidence from an Online Recommendation System," CEPR Discussion Papers 10939, C.E.P.R. Discussion Papers.
    5. Breitmoser, Yves, 2016. "Stochastic choice, systematic mistakes and preference estimation," MPRA Paper 72779, University Library of Munich, Germany.
    6. Jose Apesteguia & Miguel A. Ballester, 2014. "Discrete choice estimation of time preferences," Economics Working Papers 1442, Department of Economics and Business, Universitat Pompeu Fabra.
    7. repec:kap:theord:v:83:y:2017:i:3:d:10.1007_s11238-017-9600-5 is not listed on IDEAS
    8. Aguiar, Victor H. & Boccardi, Maria Jose & Dean, Mark, 2016. "Satisficing and stochastic choice," Journal of Economic Theory, Elsevier, vol. 166(C), pages 445-482.
    9. Yusufcan Masatlioglu & Daisuke Nakajima, 2015. "Completing Incomplete Revealed Preference Under Limited Attention," The Japanese Economic Review, Japanese Economic Association, vol. 66(3), pages 285-299, September.
    10. repec:eee:ecolet:v:159:y:2017:i:c:p:46-52 is not listed on IDEAS
    11. Andrew Caplin & Mark Dean & John Leahy, 2017. "Rationally Inattentive Behavior: Characterizing and Generalizing Shannon Entropy," NBER Working Papers 23652, National Bureau of Economic Research, Inc.
    12. Tamer Boyaci & Yalçin Akçay, 2016. "Pricing when customers have limited attention," ESMT Research Working Papers ESMT-16-01, ESMT European School of Management and Technology, revised 19 Jan 2017.
    13. Jason Abaluck & Abi Adams, 2017. "What do consumers consider before they choose? Identification from asymmetric demand responses," IFS Working Papers W17/09, Institute for Fiscal Studies.
    14. Jason Abaluck & Abi Adams, 2017. "What Do Consumers Consider Before They Choose? Identification from Asymmetric Demand Responses," NBER Working Papers 23566, National Bureau of Economic Research, Inc.
    15. Paola Manzini & Marco Mariotti, 2014. "Competing for Attention: Is the Showiest also the Best?," Discussion Paper Series, Department of Economics 201403, Department of Economics, University of St. Andrews, revised 14 Apr 2015.
    16. Valentino Dardanoni & Paola Manzini & Marco Mariotti & Christopher J. Tyson, 2017. "Inferring Cognitive Heterogeneity from Aggregate Choices," Discussion Paper Series, Department of Economics 201701, Department of Economics, University of St. Andrews, revised 25 May 2017.
    17. Liu, Xiaoou & Lopez, Rigoberto & Zhu, Chen, 2015. "Can Voluntary Nutrition Labeling Lead to a Healthier Food Market?," 2016 Allied Social Science Association (ASSA) Annual Meeting, January 3-5, 2016, San Francisco, California 212818, Agricultural and Applied Economics Association.
    18. 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.
    19. Danilov, V., 2015. "Beyond Classical Rationality: Two-Stage Rationalization," Journal of the New Economic Association, New Economic Association, vol. 26(2), pages 12-35.
    20. Breitmoser, Yves, 2017. "Discrete Choice with Presentation Effects," Rationality and Competition Discussion Paper Series 35, CRC TRR 190 Rationality and Competition.
    21. Cheremukhin, Anton & Popova, Anna & Tutino, Antonella, 2015. "A theory of discrete choice with information costs," Journal of Economic Behavior & Organization, Elsevier, vol. 113(C), pages 34-50.
    22. Alberto Vesperoni, 2016. "A contest success function for rankings," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 47(4), pages 905-937, December.
    23. Paola Manzini & Marco Mariotti, 2015. "Modelling Imperfect Attention," Working Papers 744, Queen Mary University of London, School of Economics and Finance.
    24. Aguiar, Victor H., 2017. "Random categorization and bounded rationality," Economics Letters, Elsevier, vol. 159(C), pages 46-52.
    25. Ismaël Rafaï & Mira Toumi, 2017. "Pay Attention or Be Paid for Attention? Impact of Incentives on Allocation of Attention," GREDEG Working Papers 2017-11, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.

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