DISCRETE CHOICE AND RATIONAL INATTENTION: A GENERAL EQUIVALENCE RESULT

Research output: Contribution to journalJournal articleResearchpeer-review

Documents

  • iere.12469

    Final published version, 239 KB, PDF document

This article establishes a general equivalence between discrete choice and rational inattention models. Matějka and McKay (2015) showed that when information costs are modeled using the Shannon entropy, the choice probabilities in the rational inattention (RI) model take the multinomial logit form. We show that, for one given prior over states, RI choice probabilities may take the form of any additive random utility discrete choice model (ARUM) when the information cost is a Bregman information, a class defined in this article. The prior information of the rationally inattentive agent is summarized in a constant vector of utilities in the corresponding ARUM.
Original languageEnglish
JournalInternational Economic Review
Volume61
Issue number4
Pages (from-to)1569-1589
ISSN0020-6598
DOIs
Publication statusPublished - 16 Jun 2020

Number of downloads are based on statistics from Google Scholar and www.ku.dk


No data available

ID: 244328151