Logit, CES, and rational inattention

Kód výsledku v IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F67985998%3A_____%2F20%3A00524646" target="_blank" >RIV/67985998:_____/20:00524646 - isvavai.cz</a>

Výsledek na webu

<a href="https://doi.org/10.1016/j.econlet.2019.108537" target="_blank" >https://doi.org/10.1016/j.econlet.2019.108537</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1016/j.econlet.2019.108537" target="_blank" >10.1016/j.econlet.2019.108537</a>

Jazyk výsledku

angličtina

Název v původním jazyce

Logit, CES, and rational inattention

Popis výsledku v původním jazyce

We study the fundamental links between two popular approaches to consumer choice: the multinomial logit model of individual discrete choice and the CES utility function, which describes a diversified choice of a representative consumer. We base our analysis on the rational inattention (RI) model and show that the demand system of RI agents, each of which chooses a single option, coincides with the demand system of a fictitious representative agent with CES utility function. Thus, the diversified choice of the representative agent may be explained by the heterogeneity in signals received by the RI agents. We obtain a new interpretation for the elasticity of substitution and the weighting coefficients of the CES utility function. Specifically, we provide a correspondence between parameters of the CES utility function, prior knowledge and marginal cost of information.

Název v anglickém jazyce

Logit, CES, and rational inattention

Popis výsledku anglicky

We study the fundamental links between two popular approaches to consumer choice: the multinomial logit model of individual discrete choice and the CES utility function, which describes a diversified choice of a representative consumer. We base our analysis on the rational inattention (RI) model and show that the demand system of RI agents, each of which chooses a single option, coincides with the demand system of a fictitious representative agent with CES utility function. Thus, the diversified choice of the representative agent may be explained by the heterogeneity in signals received by the RI agents. We obtain a new interpretation for the elasticity of substitution and the weighting coefficients of the CES utility function. Specifically, we provide a correspondence between parameters of the CES utility function, prior knowledge and marginal cost of information.

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

Economics Letters

ISSN

0165-1765

e-ISSN

—

Svazek periodika

186

Číslo periodika v rámci svazku

January

Stát vydavatele periodika

NL - Nizozemsko

Počet stran výsledku

5

Strana od-do

108537

Kód UT WoS článku

000509616300064

EID výsledku v databázi Scopus

2-s2.0-85071332863