DISCRETE CHOICE AND RATIONAL INATTENTION: A GENERAL EQUIVALENCE RESULT

B-Tier
Journal: International Economic Review
Year: 2020
Volume: 61
Issue: 4
Pages: 1569-1589

Authors (4)

Mogens Fosgerau (Københavns Universitet) Emerson Melo (not in RePEc) André de Palma (not in RePEc) Matthew Shum (not in RePEc)

Score contribution per author:

0.503 = (α=2.01 / 4 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

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.

Technical Details

RePEc Handle
repec:wly:iecrev:v:61:y:2020:i:4:p:1569-1589
Journal Field
General
Author Count
4
Added to Database
2026-01-25