Choice simplification: a theory of mental budgeting and naive diversification

Kód výsledku v IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F67985998%3A_____%2F20%3A00524559" target="_blank" >RIV/67985998:_____/20:00524559 - isvavai.cz</a>

Nalezeny alternativní kódy

RIV/00216208:11640/20:00540199

Výsledek na webu

<a href="https://doi.org/10.1093/qje/qjz043" target="_blank" >https://doi.org/10.1093/qje/qjz043</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1093/qje/qjz043" target="_blank" >10.1093/qje/qjz043</a>

Jazyk výsledku

angličtina

Název v původním jazyce

Choice simplification: a theory of mental budgeting and naive diversification

Popis výsledku v původním jazyce

We develop a theory of how an agent makes basic multiproduct consumption decisions in the presence of taste, consumption opportunity, and price shocks that are costly to attend to. We establish that the agent often simplifies her choices by restricting attention to a few important considerations, which depend on the decision at hand and affect her consumption patterns in specific ways. If the agent’s problem is to choose the consumption levels of many goods with different degrees of substitutability, then she may create mental budgets for more substitutable products (e.g., entertainment). In some situations, it is optimal to specify budgets in terms of consumption quantities, but when most products have an abundance of substitutes, specifying budgets in terms of nominal spending tends to be optimal. If the goods are complements, in contrast, then the agent may—consistent with naive diversification—choose a fixed, unconsidered mix of products. And if the agent’s problem is to choose one of multiple products to fulfill a given consumption need (e.g., for gasoline or a bed), then it is often optimal for her to allocate a fixed sum for the need.

Název v anglickém jazyce

Choice simplification: a theory of mental budgeting and naive diversification

Popis výsledku anglicky

We develop a theory of how an agent makes basic multiproduct consumption decisions in the presence of taste, consumption opportunity, and price shocks that are costly to attend to. We establish that the agent often simplifies her choices by restricting attention to a few important considerations, which depend on the decision at hand and affect her consumption patterns in specific ways. If the agent’s problem is to choose the consumption levels of many goods with different degrees of substitutability, then she may create mental budgets for more substitutable products (e.g., entertainment). In some situations, it is optimal to specify budgets in terms of consumption quantities, but when most products have an abundance of substitutes, specifying budgets in terms of nominal spending tends to be optimal. If the goods are complements, in contrast, then the agent may—consistent with naive diversification—choose a fixed, unconsidered mix of products. And if the agent’s problem is to choose one of multiple products to fulfill a given consumption need (e.g., for gasoline or a bed), then it is often optimal for her to allocate a fixed sum for the need.

Druh

J_imp - Článek v periodiku v databázi Web of Science

CEP obor

—

OECD FORD obor

50201 - Economic Theory

Projekt

—

Návaznosti

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Rok uplatnění

2020

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název periodika

Quarterly Journal of Economics

ISSN

0033-5533

e-ISSN

—

Svazek periodika

135

Číslo periodika v rámci svazku

2

Stát vydavatele periodika

US - Spojené státy americké

Počet stran výsledku

55

Strana od-do

1153-1207

Kód UT WoS článku

000544015700010

EID výsledku v databázi Scopus

2-s2.0-85085750571