Imperfect attention and menu evaluation
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 (2013). Our theory explains anomalies (e.g. the attraction effect) that other prominent stochastic choice theories cannot accommodate.
Citation
Manzini , P & Mariotti , M 2014 ' Imperfect attention and menu evaluation ' School of Economics & Finance Discussion Paper , no. 1319 , University of St Andrews .
ISSN
0962-4031Type
Working or discussion paper
Rights
(c) The author 2014
Description
Original version created Oct 2013Collections
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