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Revealed Preference, Rational Inattention, and Costly Information Acquisition
We develop a revealed preference test for optimal acquisition of costly information. The test encompasses models of rational inattention, sequential signal processing, and search. We provide limitsExpand
Behavioral Implications of Rational Inattention with Shannon Entropy
The model of rational inattention with Shannon mutual information costs is increasingly ubiquitous. We introduce a new solution method that lays bare the general behavioral properties of this modelExpand
Rationally Inattentive Behavior: Characterizing and Generalizing Shannon Entropy
We provide a full behavioral characterization of the standard Shannon model of rational inattention. The key axiom is "Invariance under Compression", which identifies this model as capturing an idealExpand
Testing the Reward Prediction Error Hypothesis with an Axiomatic Model
Measurements of human neural activity from the striatum, medial prefrontal cortex, amygdala, and posterior cingulate cortex satisfy necessary and sufficient conditions for the entire class of RPE models, but activity measured from the anterior insula falsifies the axiomatic model, and therefore no RPE model can account for measured activity. Expand
Rational Inattention, Optimal Consideration Sets, and Stochastic Choice
We unite two basic approaches to modelling limited attention in choice by showing that the rational inattention model implies the formation of consideration sets—only a subset of the availableExpand
Search and Satisficing
Many everyday decisions are made without full examination of all available options, and, as a result, the best available option may be missed. We develop a search-theoretic choice experiment to studyExpand
Is it All Connected? A Testing Ground for Unified Theories of Behavioral Economics Phenomena
We estimate 11 well-studied behavioral phenomena in a group of 190 laboratory subjects (short-term discount rates, small stakes risk aversion, present bias, loss aversion, the endowment effect,Expand
Status Quo Bias in Large and Small Choice Sets ∗
This paper introduces models of status quo bias based on the concept of decision avoidance, by which a decision maker may select the status quo in order to avoid a difficult decision. These modelsExpand
Probability Weighting
Last lecture we introduced the Allais Paradox and showed that it was incommensurate with the expected utility model of choice under risk. It seems that if our aim is for a descriptive model of riskyExpand
Rational Inattention and State Dependent Stochastic Choice
This work characterize choice behaviors associated with a general model of rational inattention that encompasses all those currently in the literature and experimentally elicit choice data of the form required to perform the corresponding tests. Expand