American Economic Review Vol. 102 No. 5 2012

Revealed Attention

Yusufcan Masatlioglu¹; Daisuke Nakajima¹; Erkut Y. Ozbay²

¹ University of Michigan, Department of Economics, 611 Tappan Street, Ann Arbor, MI 48109. · ² University of Maryland, Department of Economics, 3105 Tydings Hall, College Park, MD 20742.

Abstract

The standard revealed preference argument relies on an implicit assumption that a decision maker considers all feasible alternatives. The marketing and psychology literatures, however, provide well-established evidence that consumers do not consider all brands in a given market before making a purchase (Limited Attention). In this paper, we illustrate how one can deduce both the decision maker's preference and the alternatives to which she pays attention and inattention from the observed behavior. We illustrate how seemingly compelling welfare judgments without specifying the underlying choice procedure are misleading. Further, we provide a choice theoretical foundation for maximizing a single preference relation under limited attention.

DOI

10.1257/aer.102.5.2183

Volume

102

Issue

5

Pages

2183-2205

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓