Constraint Preferences: Inattention and Aggregation

Florian Mudekereza

Papers from arXiv.org

Abstract: We study robust decision problems when individuals have maxmin preferences whose belief sets are neighborhoods around reference models, commonly known as "constraint preferences." We first show that a more disciplined form of rationally inattentive behavior is equivalent to the behavior implied by a subclass of constraint preferences. We then introduce an aggregation principle that requires collective beliefs to satisfy every individual's constraint. This requirement links collective beliefs to the information-processing technologies that generate individual constraints. Applications reveal how these technologies determine asset prices, when prediction-market prices become self-confirming, and how much dynamic mechanisms can reduce information rents.

Date: 2026-06, Revised 2026-09
New Economics Papers: this item is included in nep-ict and nep-mic
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