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Imperfect Attention and Menu Evaluations

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  • Manzini, Paola
  • Mariotti, Marco

Abstract

We model the choice behaviour of an agent who suffers from imperfect attention but is otherwise von Neumann Morgenstern rational. 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 on the domain of menus and alternatives imply that the agent notices each alternative with a given menu-dependent probability (attention parameter) and maximises a menu independent utility function over the alternatives he notices. Preference for flexibility restricts the model to menu independent attention parameters as in Manzini and Mariotti [17]. Our theory explains anomalies (e.g. the attraction effect) that other prominent stochastic choice theories cannot accommodate.

Suggested Citation

  • Manzini, Paola & Mariotti, Marco, 2013. "Imperfect Attention and Menu Evaluations," SIRE Discussion Papers 2013-98, Scottish Institute for Research in Economics (SIRE).
  • Handle: RePEc:edn:sirdps:523
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    File URL: http://hdl.handle.net/10943/523
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    References listed on IDEAS

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    1. Elena Reutskaja & Rosemarie Nagel & Colin F. Camerer & Antonio Rangel, 2011. "Search Dynamics in Consumer Choice under Time Pressure: An Eye-Tracking Study," American Economic Review, American Economic Association, vol. 101(2), pages 900-926, April.
    2. Clark, Stephen A., 1995. "Indecisive choice theory," Mathematical Social Sciences, Elsevier, vol. 30(2), pages 155-170, October.
    3. Ortoleva, Pietro, 2013. "The price of flexibility: Towards a theory of Thinking Aversion," Journal of Economic Theory, Elsevier, vol. 148(3), pages 903-934.
    4. 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.
    5. Kreps, David M, 1979. "A Representation Theorem for "Preference for Flexibility"," Econometrica, Econometric Society, vol. 47(3), pages 565-577, May.
    6. Paola Manzini & Marco Mariotti, 2014. "Stochastic Choice and Consideration Sets," Econometrica, Econometric Society, vol. 82(3), pages 1153-1176, May.
    7. Barberà, Salvador & Grodal, Birgit, 2011. "Preference for flexibility and the opportunities of choice," Journal of Mathematical Economics, Elsevier, vol. 47(3), pages 272-278.
    8. Kfir Eliaz & Ran Spiegler, 2011. "Consideration Sets and Competitive Marketing," Review of Economic Studies, Oxford University Press, vol. 78(1), pages 235-262.
    9. David S. Ahn & Todd Sarver, 2013. "Preference for Flexibility and Random Choice," Econometrica, Econometric Society, vol. 81(1), pages 341-361, January.
    10. Huber, Joel & Payne, John W & Puto, Christopher, 1982. " Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis," Journal of Consumer Research, Oxford University Press, vol. 9(1), pages 90-98, June.
    11. Sims, Christopher A., 2003. "Implications of rational inattention," Journal of Monetary Economics, Elsevier, vol. 50(3), pages 665-690, April.
    12. Huber, Joel & Puto, Christopher, 1983. " Market Boundaries and Product Choice: Illustrating Attraction and Substitution Effects," Journal of Consumer Research, Oxford University Press, vol. 10(1), pages 31-44, June.
    13. Mattsson, Lars-Goran & Weibull, Jorgen W., 2002. "Probabilistic choice and procedurally bounded rationality," Games and Economic Behavior, Elsevier, vol. 41(1), pages 61-78, October.
    14. Faruk Gul & Paulo Natenzon & Wolfgang Pesendorfer, 2014. "Random Choice as Behavioral Optimization," Econometrica, Econometric Society, vol. 82, pages 1873-1912, September.
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    16. repec:spr:joecth:v:65:y:2018:i:3:d:10.1007_s00199-016-1025-9 is not listed on IDEAS
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    Keywords

    bounded rationality; stochastic choicens;

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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