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DISCRETE CHOICE AND RATIONAL INATTENTION: A GENERAL EQUIVALENCE RESULT

This article establishes a general equivalence between discrete choice and rational inattention models. Matějka and McKay (2015) showed that when information costs are modeled using the Shannon entropy, the choice probabilities in the rational inattention (RI) model take the multinomial logit form....

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Detalles Bibliográficos
Autores principales: Fosgerau, Mogens, Melo, Emerson, de Palma, André, Shum, Matthew
Formato: Online Artículo Texto
Lenguaje:English
Publicado: John Wiley and Sons Inc. 2020
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7687267/
https://www.ncbi.nlm.nih.gov/pubmed/33288966
http://dx.doi.org/10.1111/iere.12469
Descripción
Sumario:This article establishes a general equivalence between discrete choice and rational inattention models. Matějka and McKay (2015) showed that when information costs are modeled using the Shannon entropy, the choice probabilities in the rational inattention (RI) model take the multinomial logit form. We show that, for one given prior over states, RI choice probabilities may take the form of any additive random utility discrete choice model (ARUM) when the information cost is a Bregman information, a class defined in this article. The prior information of the rationally inattentive agent is summarized in a constant vector of utilities in the corresponding ARUM.