Stochastic choice and consideration sets

Paola Manzini, Marco Mariotti

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    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 maximises 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.
    Original languageEnglish
    Pages (from-to)1153-1176
    Number of pages24
    JournalEconometrica
    Volume89
    Issue number3
    Early online date2 Jun 2013
    DOIs
    Publication statusPublished - 2014

    Keywords

    • Discrete choice
    • Random utility
    • Logit model
    • Luce model
    • Consideration sets
    • Bounded rationality
    • Revealed preferences

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