Assessing axioms of theories of limited attention

Nuttaporn Rochanahastin

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2020, vol. 84, issue C

Abstract: It is very likely that many decisions made by individuals are made without a complete or exhaustive deliberation process. One of the plausible explanations for this behaviour, that has recently received much recognition in economics, is that people have limited attention. This assumption has motivated many new theories, which are increasingly founded on axioms. This research experimentally tested two of these theories, those of Masatlioglu, Nakajima and Ozbay (2012) and Lleras Masatlioglu Nakajima and Ozbay (2017), which are based on the revealed preference framework and are built on axioms which are weakenings of the Weak Axiom of Revealed Preference (WARP) ̶ the standard axiom of preference theory. This paper uses standard choice data to determine the (relative) validity of their underlying axioms, compared to a benchmark of the violation rate given by random behaviour. WARP(LA) (Masatlioglu et al. (2012)) results in fewer violations, though LC-WARP (Lleras et al. (2017)) has higher correct prediction rates.

Keywords: Experiments; Limited attention; Revealed preference; Axioms (search for similar items in EconPapers)
JEL-codes: C91 D01 D12 D83 D91 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:84:y:2020:i:c:s2214804318305342

DOI: 10.1016/j.socec.2019.101499

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