Fosgerau, Mogens and Melo, Emerson and Shum, Matt (2017): Discrete Choice and Rational Inattention: a General Equivalence Result�.
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Abstract
This paper establishes a general equivalence between discrete choice and rational inattention models. We show that the choice probabilities emerging from any random utility discrete choice model can be obtained from a class of suitably generalized rational inattention models, and vice versa. Thus any discrete choice model can be given an interpretation in terms of boundedly rational behavior. The underlying idea is that the surplus function of a discrete choice model has a convex conjugate that is a generalized entropy (which is a suitable generalization of the Shannon entropy function). These generalized entropies are used to construct an information cost function for a generalized rational inattention model. We denote this class of rational inattention problems as Generalized Entropic Rational Inattention (GERI) models.
Item Type:  MPRA Paper 

Original Title:  Discrete Choice and Rational Inattention: a General Equivalence Result� 
Language:  English 
Keywords:  Rational Inattention; discrete choices; general entropy; con vex analysis 
Subjects:  C  Mathematical and Quantitative Methods > C2  Single Equation Models ; Single Variables > C25  Discrete Regression and Qualitative Choice Models ; Discrete Regressors ; Proportions ; Probabilities D  Microeconomics > D0  General > D03  Behavioral Microeconomics: Underlying Principles D  Microeconomics > D8  Information, Knowledge, and Uncertainty > D81  Criteria for DecisionMaking under Risk and Uncertainty E  Macroeconomics and Monetary Economics > E0  General > E03  Behavioral Macroeconomics 
Item ID:  76605 
Depositing User:  Prof. Mogens Fosgerau 
Date Deposited:  05 Feb 2017 10:02 
Last Modified:  30 Sep 2019 05:13 
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URI:  https://mpra.ub.unimuenchen.de/id/eprint/76605 
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