Inferring cognitive heterogeneity from aggregate choices

Valentino Dardanoni; Paola Manzini; Marco Mariotti; Christopher J. Tyson

Inferring cognitive heterogeneity from aggregate choices

Valentino Dardanoni, Paola Manzini, Marco Mariotti, Christopher J. Tyson

Research output: Working paper › Discussion paper

Abstract

We study the problem of recovering the distribution of cognitive characteristics in a population of boundedly rational agents from the aggregate choices they make from a fixed menu of alternatives. Two models of limited attention are examined from this point of view, and it is shown that both “consideration probability” and “consideration capacity” distributions are substantially identified by aggregate choice shares. These models are applied to data on over-the-counter painkiller sales, yielding concurrent estimates that on average two or three out of the eight available products are considered in this market.

Original language	English
Place of Publication	St Andrews
Publisher	University of St Andrews
Number of pages	29
Publication status	Published - 25 May 2017

Publication series

Name	School of Economics and Finance Discussion Paper
Publisher	University of St Andrews
No.	1701
ISSN (Print)	0962-4031
ISSN (Electronic)	2055-303X

Keywords

Attention
Bounded rationality
Revealed preference
Stochastic choice

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Manzini_EconDiscPap_1701revised3
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Cite this

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AU - Dardanoni, Valentino

AU - Manzini, Paola

AU - Mariotti, Marco

AU - Tyson, Christopher J.

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PY - 2017/5/25

Y1 - 2017/5/25

N2 - We study the problem of recovering the distribution of cognitive characteristics in a population of boundedly rational agents from the aggregate choices they make from a fixed menu of alternatives. Two models of limited attention are examined from this point of view, and it is shown that both “consideration probability” and “consideration capacity” distributions are substantially identified by aggregate choice shares. These models are applied to data on over-the-counter painkiller sales, yielding concurrent estimates that on average two or three out of the eight available products are considered in this market.

AB - We study the problem of recovering the distribution of cognitive characteristics in a population of boundedly rational agents from the aggregate choices they make from a fixed menu of alternatives. Two models of limited attention are examined from this point of view, and it is shown that both “consideration probability” and “consideration capacity” distributions are substantially identified by aggregate choice shares. These models are applied to data on over-the-counter painkiller sales, yielding concurrent estimates that on average two or three out of the eight available products are considered in this market.

KW - Attention

KW - Bounded rationality

KW - Revealed preference

KW - Stochastic choice

UR - https://ideas.repec.org/p/san/wpecon/1701.html

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T3 - School of Economics and Finance Discussion Paper

BT - Inferring cognitive heterogeneity from aggregate choices

PB - University of St Andrews

CY - St Andrews

ER -

Inferring cognitive heterogeneity from aggregate choices

Abstract

Publication series

Keywords

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CHOICE WITH ERRORS: Choice with Errors