On the observable restrictions of limited consideration models: theory and application

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

No 217, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: This paper develops revealed preference analysis for limited consideration models. A revealed preference test is given for the decision model obeying two well-established hypotheses on a decision maker fs consideration: the attention filter property and competition filter property. We also provide a test for the two-step decision model called the (transitive) rational shortlist method. As an application, we conducted a simulation to compare the relative strength of observable restrictions across leading models, in addition to an experiment to compare models in terms of Selten fs index, which is a measure for plausibility of a model in explaining a given data set.

Keywords: Revealed preference; Limited consideration; Limited attention; Rational short- listing; Bronars f test; Selten fs index (search for similar items in EconPapers)
JEL-codes: C6 D1 D9 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2020-06
New Economics Papers: this item is included in nep-cmp, nep-dcm and nep-ore
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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:217

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