IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v205y2021ics0165176521002317.html
   My bibliography  Save this article

Dogit model and rational inattention

Author

Listed:
  • Nchare, Karim

Abstract

This paper establishes an equivalence result between the Dogit model and the rational inattention model. The Dogit choice model introduced by Gaudry and Dagenais (1979) is an extension of the multinomial logit model which can potentially violate the independence of irrelevant alternatives axiom and allow for captive or inattentive behaviors. McFadden (1981) argues that a drawback of the Dogit model is its inconsistency with the standard random utility framework. We show that when the information cost is modeled using a generalized Shannon entropy function, the Dogit model is observationally equivalent to a rational inattention model.

Suggested Citation

  • Nchare, Karim, 2021. "Dogit model and rational inattention," Economics Letters, Elsevier, vol. 205(C).
    • Handle: RePEc:eee:ecolet:v:205:y:2021:i:c:s0165176521002317
    DOI: 10.1016/j.econlet.2021.109954
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176521002317
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2021.109954?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kannan, P. K. & Yim, Chi Kin (Bennett), 2001. "An investigation of the impact of promotions on across-submarket competition," Journal of Business Research, Elsevier, vol. 53(3), pages 137-149, September.
    2. Small, Kenneth A, 1987. "A Discrete Choice Model for Ordered Alternatives," Econometrica, Econometric Society, vol. 55(2), pages 409-424, March.
    3. Marc J. I. Gaudry, 1980. "Dogit and Logit Models of Travel Mode Choice in Montreal," Canadian Journal of Economics, Canadian Economics Association, vol. 13(2), pages 268-279, May.
    4. Filip Matêjka & Alisdair McKay, 2015. "Rational Inattention to Discrete Choices: A New Foundation for the Multinomial Logit Model," American Economic Review, American Economic Association, vol. 105(1), pages 272-298, January.
    5. Mogens Fosgerau & Emerson Melo & André de Palma & Matthew Shum, 2020. "Discrete Choice And Rational Inattention: A General Equivalence Result," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(4), pages 1569-1589, November.
    6. Gaudry, Marc J. I. & Wills, Michael J., 1979. "Testing the dogit model with aggregate time-series and cross-sectional travel data," Transportation Research Part B: Methodological, Elsevier, vol. 13(2), pages 155-166, June.
    7. Gaundry, Marc J. I. & Dagenais, Marcel G., 1979. "The dogit model," Transportation Research Part B: Methodological, Elsevier, vol. 13(2), pages 105-111, June.
    8. Bordley, Robert F., 1990. "The dogit model is applicable even without perfectly captive buyers," Transportation Research Part B: Methodological, Elsevier, vol. 24(4), pages 315-323, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fry, Tim R. L. & Harris, Mark N., 1996. "A Monte Carlo study of tests for the independence of irrelevant alternatives property," Transportation Research Part B: Methodological, Elsevier, vol. 30(1), pages 19-30, February.
    2. Emerson Melo, 2021. "Learning in Random Utility Models Via Online Decision Problems," Papers 2112.10993, arXiv.org, revised Aug 2022.
    3. Wang, Guangchao & Chen, Anthony & Kitthamkesorn, Songyot & Ryu, Seungkyu & Qi, Hang & Song, Ziqi & Song, Jianguo, 2020. "A multi-modal network equilibrium model with captive mode choice and path size logit route choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 136(C), pages 293-317.
    4. Emerson Melo, 2021. "Learning In Random Utility Models Via Online Decision Problems," CAEPR Working Papers 2022-003 Classification-D, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    5. Lindbeck, Assar & Weibull, Jörgen, 2020. "Delegation of investment decisions, and optimal remuneration of agents," European Economic Review, Elsevier, vol. 129(C).
    6. Bartosz Maćkowiak & Filip Matějka & Mirko Wiederholt, 2023. "Rational Inattention: A Review," Journal of Economic Literature, American Economic Association, vol. 61(1), pages 226-273, March.
    7. Kashaev, Nail & Aguiar, Victor H., 2022. "A random attention and utility model," Journal of Economic Theory, Elsevier, vol. 204(C).
    8. Bertoli, Simone & Moraga, Jesús Fernández-Huertas & Guichard, Lucas, 2020. "Rational inattention and migration decisions," Journal of International Economics, Elsevier, vol. 126(C).
    9. Cristina Gualdani & Shruti Sinha, 2019. "Identification in discrete choice models with imperfect information," Papers 1911.04529, arXiv.org, revised Dec 2023.
    10. Habib, Khandker Nurul, 2023. "Rational inattention in discrete choice models: Estimable specifications of RI-multinomial logit (RI-MNL) and RI-nested logit (RI-NL) models," Transportation Research Part B: Methodological, Elsevier, vol. 172(C), pages 53-70.
    11. Mogens Fosgerau & Julien Monardo & André de Palma, 2024. "The Inverse Product Differentiation Logit Model," American Economic Journal: Microeconomics, American Economic Association, vol. 16(4), pages 329-370, November.
    12. Botond Kőszegi & Filip Matějka, 2020. "Choice Simplification: A Theory of Mental Budgeting and Naive Diversification [“Fungibility, Labels, and Consumption,”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 1153-1207.
    13. Fosgerau, Mogens & Jiang, Gege, 2019. "Travel time variability and rational inattention," Transportation Research Part B: Methodological, Elsevier, vol. 120(C), pages 1-14.
    14. Quaglione, Davide & Cassetta, Ernesto & Crociata, Alessandro & Marra, Alessandro & Sarra, Alessandro, 2019. "An assessment of the role of cultural capital on sustainable mobility behaviours: Conceptual framework and empirical evidence," Socio-Economic Planning Sciences, Elsevier, vol. 66(C), pages 24-34.
    15. Sasic, Ana & Habib, Khandker Nurul, 2013. "Modelling departure time choices by a Heteroskedastic Generalized Logit (Het-GenL) model: An investigation on home-based commuting trips in the Greater Toronto and Hamilton Area (GTHA)," Transportation Research Part A: Policy and Practice, Elsevier, vol. 50(C), pages 15-32.
    16. Yves Breitmoser, 2021. "Controlling for presentation effects in choice," Quantitative Economics, Econometric Society, vol. 12(1), pages 251-281, January.
    17. Flynn, Joel P. & Sastry, Karthik A., 2023. "Strategic mistakes," Journal of Economic Theory, Elsevier, vol. 212(C).
    18. Knies, Austin & Lorca, Jorge & Melo, Emerson, 2022. "A recursive logit model with choice aversion and its application to transportation networks," Transportation Research Part B: Methodological, Elsevier, vol. 155(C), pages 47-71.
    19. Emerson Melo, 2022. "On The Distributional Robustness Of Finite Rational Inattention Models," CAEPR Working Papers 2022-011 Classification-D, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    20. Roy Allen, 2024. "Exogenous Consideration and Extended Random Utility," Papers 2405.13945, arXiv.org.

    More about this item

    Keywords

    Discrete choice; Dogit model; Multinomial logit; Rational inattention;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D10 - Microeconomics - - Household Behavior - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:205:y:2021:i:c:s0165176521002317. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.