A Random Attention Model

Y. Masatlioglu, M. Cattaneo, X. Ma, and E. Suleymanov, Journal of Political Economy 128(7), 2796-2836, July .

Abstract:

This paper illustrates how one can deduce preference from observed choices when attention is both limited and random. We introduce a random attention model where we abstain from any particular attention formation and instead consider a large class of nonparametric random attention rules. Our intuitive condition, monotonic attention, captures the idea that each consideration set competes for the decision maker’s attention. We then develop a revealed preference theory and obtain testable implications. We propose econometric methods for identification, estimation, and inference for the revealed preferences. Finally, we provide a general-purpose software implementation of our estimation and inference results and simulation evidence.

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