Limited consideration and limited data: revealed preference tests and observable restrictions

Yuta Inoue () and Koji Shirai ()
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Yuta Inoue: Graduate School of Economics, Waseda University
Koji Shirai: School of Economics, Kwansei Gakuin University

No 176-2, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: This paper develops revealed preference tests for choice models under limited consideration, allowing a partially observed data set. Leading theories in the literature such as the limited attention model, the rationalization model, the categorize-then-choose model, and the rational shortlisting models are covered. Given a tool for testing limited consideration models, we analyze the empirical aspects of them. Our revealed preference tests are applied to randomly generated data sets to compare the strength of observable restrictions across various models. In addition, we carried out an experiment to compare models in terms of Selten’s index, which is a measure for plausibility of a model in explaining a given data set. As a result, remarkable differences are seen both in observable restrictions and Selten’s indices across models.

Keywords: Revealed preference; Limited consideration; Limited attention; Rational shortlisting; Bronars’ test; Selten’s index (search for similar items in EconPapers)
JEL-codes: C6 D1 D8 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2018-03, Revised 2019-08
New Economics Papers: this item is included in nep-dcm, nep-mic and nep-upt
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http://192.218.163.163/RePEc/pdf/kgdp176-2.pdf Revised version, 2019 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:176-2

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