Price inattention: A revealed preference characterisation

Eileen Tipoe

European Economic Review, 2021, vol. 134, issue C

Abstract: This paper develops a revealed preference method to set-identify the degree of price inattention at the individual level, in a non-experimental, multi-good setting. Necessary and sufficient conditions for consistency with a particular type of price inattention are derived, and used to recover individual-specific sets from household scanner data. This price inattention model significantly outperforms its standard counterpart for most specifications of price inattention considered. The minimum and maximum degrees of inattention are generally small, but vary considerably across households and have significant correlations with household characteristics. These results provide further evidence that heterogeneity in price inattention is empirically important.

Keywords: Price inattention; Revealed preference; Preference heterogeneity (search for similar items in EconPapers)
JEL-codes: D11 D12 D91 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:134:y:2021:i:c:s0014292121000453

DOI: 10.1016/j.euroecorev.2021.103692

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