Completing Incomplete Revealed Preference Under Limited Attention

15 Pages Posted: 30 Jul 2015

See all articles by Yusufcan Masatlioglu

Yusufcan Masatlioglu

University of Michigan

Daisuke Nakajima

University of Michigan at Ann Arbor; Otaru University of Commerce

Date Written: September 2015

Abstract

This paper discusses how to improve the identification of the preference of a decision‐maker (DM) with limited attention proposed by Masatlioglu, Nakajima and Ozbay (2012). in “Revealed Attention”. Their identification method relies on choice reversals so the obtained revealed preference is often incomplete. We propose three approaches to address this problem. The first one is accommodating a model‐free approach, which respects the DM's choice in making a welfare analysis, as long as it does not contradict the revealed preference of Masatlioglu et al. The second approach incorporates the DM's exogenously obtained attention/inattention information into the model of Masatlioglu et al. The third approach is to take framings that influence the DM's attention into effect for the identification.

JEL Classification: D11, D60, D81

Suggested Citation

Masatlioglu, Yusufcan and Nakajima, Daisuke, Completing Incomplete Revealed Preference Under Limited Attention (September 2015). Japanese Economic Review, Vol. 66, Issue 3, pp. 285-299, 2015, Available at SSRN: https://ssrn.com/abstract=2637673 or http://dx.doi.org/10.1111/jere.12066

Yusufcan Masatlioglu (Contact Author)

University of Michigan ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

Daisuke Nakajima

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

Otaru University of Commerce ( email )

3-5-21 Midori
Otaru-shi, Hokkaido 047-8501
United States

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