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On the observable restrictions of limited consideration models: theory and application

Author

Listed:
  • Yuta Inoue

    (Faculty of Political Science and Economics, Waseda University)

  • Koji Shirai

    (School of Economics, Kwansei Gakuin University)

Abstract

This paper develops revealed preference analysis for limited consideration models. A revealed preference test is given for the decision model obeying two well-established hypotheses on a decision maker fs consideration: the attention filter property and competition filter property. We also provide a test for the two-step decision model called the (transitive) rational shortlist method. As an application, we conducted a simulation to compare the relative strength of observable restrictions across leading models, in addition to an experiment to compare models in terms of Selten fs index, which is a measure for plausibility of a model in explaining a given data set.

Suggested Citation

  • Yuta Inoue & Koji Shirai, 2020. "On the observable restrictions of limited consideration models: theory and application," Discussion Paper Series 217, School of Economics, Kwansei Gakuin University.
    • Handle: RePEc:kgu:wpaper:217
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    References listed on IDEAS

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    More about this item

    Keywords

    ; Revealed preference; Limited consideration; Limited attention; Rational short- listing; Bronars f test; Selten fs index;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D1 - Microeconomics - - Household Behavior
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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