Inferring cognitive heterogeneity from aggregate choices
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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.
Dardanoni , V , Manzini , P , Mariotti , M & Tyson , C J 2017 ' Inferring cognitive heterogeneity from aggregate choices ' School of Economics and Finance Discussion Paper , no. 1701 , University of St Andrews , St Andrews .
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DescriptionManzini and Mariotti thank the ESRC for the financial support provided under grant ES/J012513/1.
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