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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
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author Fosgerau, Mogens
Melo, Emerson
de Palma, André
Shum, Matthew
author_facet Fosgerau, Mogens
Melo, Emerson
de Palma, André
Shum, Matthew
author_sort Fosgerau, Mogens
collection PubMed
description 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.
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spelling pubmed-76872672020-12-05 DISCRETE CHOICE AND RATIONAL INATTENTION: A GENERAL EQUIVALENCE RESULT Fosgerau, Mogens Melo, Emerson de Palma, André Shum, Matthew Int Econ Rev (Philadelphia) Original Articles 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. John Wiley and Sons Inc. 2020-06-16 2020-11 /pmc/articles/PMC7687267/ /pubmed/33288966 http://dx.doi.org/10.1111/iere.12469 Text en © 2020 The Authors. International Economic Review published by Wiley Periodicals LLC on behalf of the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association This is an open access article under the terms of the http://creativecommons.org/licenses/by-nc-nd/4.0/ License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non‐commercial and no modifications or adaptations are made.
spellingShingle Original Articles
Fosgerau, Mogens
Melo, Emerson
de Palma, André
Shum, Matthew
DISCRETE CHOICE AND RATIONAL INATTENTION: A GENERAL EQUIVALENCE RESULT
title DISCRETE CHOICE AND RATIONAL INATTENTION: A GENERAL EQUIVALENCE RESULT
title_full DISCRETE CHOICE AND RATIONAL INATTENTION: A GENERAL EQUIVALENCE RESULT
title_fullStr DISCRETE CHOICE AND RATIONAL INATTENTION: A GENERAL EQUIVALENCE RESULT
title_full_unstemmed DISCRETE CHOICE AND RATIONAL INATTENTION: A GENERAL EQUIVALENCE RESULT
title_short DISCRETE CHOICE AND RATIONAL INATTENTION: A GENERAL EQUIVALENCE RESULT
title_sort discrete choice and rational inattention: a general equivalence result
topic Original Articles
url 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
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