IDEAS home Printed from https://ideas.repec.org/a/spr/joecth/v75y2023i3d10.1007_s00199-022-01418-4.html
   My bibliography  Save this article

On the observable restrictions of limited consideration models: theory and application

Author

Listed:
  • Yuta Inoue

    (Waseda University, 1-6-1, Nishi-Waseda, Shinjuku-ku)

  • Koji Shirai

    (Kwansei Gakuin University, 1-155, Uegahara Ichiban-cho)

Abstract

This paper develops a revealed preference analysis for limited consideration models. A revealed preference test is given for the decision model obeying two well-established hypotheses on a decision maker’s consideration: the attention filter property and competition filter property. We also provide a test for the two-step decision model called the (transitive) rational shortlist method. We conduct simulations to compare the relative strength of observable restrictions across leading models, where we find drastic differences in Bronars’ indices of models.

Suggested Citation

  • Yuta Inoue & Koji Shirai, 2023. "On the observable restrictions of limited consideration models: theory and application," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(3), pages 695-715, April.
    • Handle: RePEc:spr:joecth:v:75:y:2023:i:3:d:10.1007_s00199-022-01418-4
    DOI: 10.1007/s00199-022-01418-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s00199-022-01418-4
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s00199-022-01418-4?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. de Clippel, Geoffroy & Rozen, Kareen, 2021. "Bounded rationality and limited datasets," Theoretical Economics, Econometric Society, vol. 16(2), May.
    2. Paola Manzini & Marco Mariotti, 2012. "Categorize Then Choose: Boundedly Rational Choice And Welfare," Journal of the European Economic Association, European Economic Association, vol. 10(5), pages 1141-1165, October.
    3. Paola Manzini & Marco Mariotti, 2014. "Stochastic Choice and Consideration Sets," Econometrica, Econometric Society, vol. 82(3), pages 1153-1176, May.
    4. Lleras, Juan Sebastián & Masatlioglu, Yusufcan & Nakajima, Daisuke & Ozbay, Erkut Y., 2017. "When more is less: Limited consideration," Journal of Economic Theory, Elsevier, vol. 170(C), pages 70-85.
    5. Schwartz, Thomas, 1976. "Choice functions, "rationality" conditions, and variations on the weak axiom of revealed preference," Journal of Economic Theory, Elsevier, vol. 13(3), pages 414-427, December.
    6. Au, Pak Hung & Kawai, Keiichi, 2011. "Sequentially rationalizable choice with transitive rationales," Games and Economic Behavior, Elsevier, vol. 73(2), pages 608-614.
    7. Amartya K. Sen, 1971. "Choice Functions and Revealed Preference," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(3), pages 307-317.
    8. Paola Manzini & Marco Mariotti, 2007. "Sequentially Rationalizable Choice," American Economic Review, American Economic Association, vol. 97(5), pages 1824-1839, December.
    9. Dean, Mark & Kıbrıs, Özgür & Masatlioglu, Yusufcan, 2017. "Limited attention and status quo bias," Journal of Economic Theory, Elsevier, vol. 169(C), pages 93-127.
    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. Yuta Inoue & Koji Shirai, 2020. "On the observable restrictions of limited consideration models: theory and application," Discussion Paper Series 217, School of Economics, Kwansei Gakuin University.
    2. Yuta Inoue & Koji Shirai, 2018. "Limited consideration and limited data: revealed preference tests and observable restrictions," Discussion Paper Series 176, School of Economics, Kwansei Gakuin University, revised Mar 2018.
    3. Yuta Inoue & Koji Shirai, 2018. "Limited consideration and limited data: revealed preference tests and observable restrictions," Discussion Paper Series 176-2, School of Economics, Kwansei Gakuin University, revised Aug 2019.
    4. Furtado, Bruno A. & Nascimento, Leandro & Riella, Gil, 2023. "Rational choice with full-comparability domains," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 124-135.
    5. Yusufcan Masatlioglu & Elchin Suleymanov, 2021. "Decision making within a product network," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(1), pages 185-209, February.
    6. Kops, Christopher, 2022. "Cluster-shortlisted choice," Journal of Mathematical Economics, Elsevier, vol. 102(C).
    7. Domenico Cantone & Alfio Giarlotta & Stephen Watson, 2019. "Congruence relations on a choice space," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 52(2), pages 247-294, February.
    8. Juan Lleras & Yusufcan Masatlioglu & Daisuke Nakajima & Erkut Ozbay, 2021. "Path-Independent Consideration," Games, MDPI, vol. 12(1), pages 1-10, March.
    9. Rochanahastin, Nuttaporn, 2020. "Assessing axioms of theories of limited attention," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 84(C).
    10. Yuta Inoue, 2020. "Growing Consideration," Working Papers 2003, Waseda University, Faculty of Political Science and Economics.
    11. Alfio Giarlotta & Angelo Petralia & Stephen Watson, 2022. "Semantics meets attractiveness: Choice by salience," Papers 2204.08798, arXiv.org, revised Aug 2022.
    12. Giarlotta, Alfio & Petralia, Angelo & Watson, Stephen, 2022. "Bounded rationality is rare," Journal of Economic Theory, Elsevier, vol. 204(C).
    13. Yukinori Iwata, 2023. "Evaluating opportunities when more is less," Theory and Decision, Springer, vol. 95(1), pages 109-130, July.
    14. Yukinori Iwata, 2018. "Salience and limited attention," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 50(1), pages 123-146, January.
    15. T. Hayashi & R. Jain & V. Korpela & M. Lombardi, 2023. "Behavioral strong implementation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 76(4), pages 1257-1287, November.
    16. Demirkan, Yusufcan & Kimya, Mert, 2020. "Hazard rate, stochastic choice and consideration sets," Journal of Mathematical Economics, Elsevier, vol. 87(C), pages 142-150.
    17. Yuta Inoue, 2020. "Rationalizing choice functions with a weak preference," Working Papers 2004, Waseda University, Faculty of Political Science and Economics.
    18. Salvador Barberà & Geoffroy de Clippel & Alejandro Neme & Kareen Rozen, 2022. "Order-k rationality," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 73(4), pages 1135-1153, June.
      • Salvador Barberà & Geoffroy De Clippel & Alejandro Neme & Kareen Rozen, 2019. "Order-k Rationality," Working Papers 1130, Barcelona School of Economics.
      • Salvador Barberà & Geoffroy De Cleppel & Alejandro Neme & Kareen Rozeen, 2020. "Order-k Rationality," Working Papers 4, Red Nacional de Investigadores en Economía (RedNIE).
      • Salvador Barber‡ & Geoffroy de Clippel & Alejandro Neme & Kareen Rozen, 2020. "Order-k Rationality," Working Papers 2020-10, Brown University, Department of Economics.
    19. Caliari, Daniele, 2023. "Behavioural welfare analysis and revealed preference: Theory and experimental evidence," Discussion Papers, Research Unit: Economics of Change SP II 2023-303, WZB Berlin Social Science Center.
    20. Ian Chadd & Emel Filiz-Ozbay & Erkut Y. Ozbay, 2021. "The relevance of irrelevant information," Experimental Economics, Springer;Economic Science Association, vol. 24(3), pages 985-1018, September.

    More about this item

    Keywords

    Revealed preference; Limited consideration; Limited attention; Rational shortlisting; Bronars’ test;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

    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:spr:joecth:v:75:y:2023:i:3:d:10.1007_s00199-022-01418-4. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.