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Inferring Cognitive Heterogeneity From Aggregate Choices

Author

Listed:
  • Valentino Dardanoni
  • Paola Manzini
  • Marco Mariotti
  • Christopher J. Tyson

Abstract

Theories of bounded rationality often assume a rich dataset of choices from many overlapping menus, limiting their practical applicability. In contrast, we study the problem of identifying the distribution of cognitive characteristics in a population of agents from a minimal dataset that consists of aggregate choice shares from a single menu, and includes no observable covariates of any kind. With homogeneous preferences, we find that “consideration capacity” and “consideration probability” distributions can both be recovered effectively if the menu is sufficiently large. This remains true generically when tastes are heterogeneous with a known distribution. When the taste distribution is unknown, we show that joint choice share data from three “occasions” are generically sufficient for full identification of the cognitive distribution, and also provide substantial information about tastes.

Suggested Citation

  • Valentino Dardanoni & Paola Manzini & Marco Mariotti & Christopher J. Tyson, 2020. "Inferring Cognitive Heterogeneity From Aggregate Choices," Econometrica, Econometric Society, vol. 88(3), pages 1269-1296, May.
    • Handle: RePEc:wly:emetrp:v:88:y:2020:i:3:p:1269-1296
    DOI: 10.3982/ECTA16382
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    File URL: https://doi.org/10.3982/ECTA16382
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Francesco Cerigioni, 2016. "Dual Decision Processes: Retrieving Preferences when some Choices are Automatic," Working Papers 924, Barcelona Graduate School of Economics.
    2. Victor H. Aguiar & Nail Kashaev, 2019. "Discrete Choice and Welfare Analysis with Unobserved Choice Sets," Papers 1907.04853, arXiv.org, revised Jul 2019.
    3. Levon Barseghyan & Francesca Molinari & Matthew Thirkettle, 2019. "Discrete choice under risk with limited consideration," CeMMAP working papers CWP08/19, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.

    More about this item

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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