The Allocation of Attention: Theory and Evidence

Gabaix, Xavier; Laibson, David; Moloche, Guillermo

doi:10.2139/ssrn.444840

Cited by 42 publications

(20 citation statements)

References 33 publications

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“…Promising research explicitly studying complexity, information processing and effort allocation include Berrens et al (2004) and Lienhoop and Fischer (2009) for CV, Meyerhoff and Liebe (2009) and Boxall et al (2009) for CM, and DeShazo and Fermo (2002) comparing both SP approaches. Gabaix et al (2003) provides a more general theoretical framework.…”

Section: Satisficingmentioning

confidence: 99%

Using Internet in Stated Preference Surveys: A Review and Comparison of Survey Modes

Lindhjem

Navrud

2011

IRERE

126

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Internet is quickly becoming the survey mode of choice for stated preference (SP) surveys in environmental economics. However, this choice is being made with relatively little consideration of its potential influence on survey results. This paper reviews the theory and emerging evidence of mode effects in the survey methodology and SP literatures, summarizes the findings, and points out implications for Internet SP practice and research. The SP studies that compare Internet with other modes do generally not find substantial difference. The majority of welfare estimates are equal; or somewhat lower for the Internet surveys. Further, there is no clear evidence of substantially lower quality or validity of Internet responses. However, the degree of experimental control is often low in comparative studies across survey modes, and they often confound measurement and sample composition effects. Internet offers a huge potential for experimentation and innovation in SP research, but when used to derive reliable welfare estimates for policy assessment, issues like representation and nonresponse bias for different Internet panels should receive more attention.

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Section: Satisficingmentioning

confidence: 99%

Using Internet in Stated Preference Surveys: A Review and Comparison of Survey Modes

Lindhjem

Navrud

2011

IRERE

126

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“…This approach has been widely used to estimate revealed-preference choice data models in transportation, geography, marketing, and environmental valuation (Swait and BenAkiva, 1987;Horowitz, 1991;Ben-Akiva and Boccara, 1995;Haab and Hicks, 1997;Dai, 1998;Swait, 2001;and Basar and Bhat, 2004). Cameron and DeShazo (2004, hereafter CDS), building on work by Gabaix et al (2003) and DeShazo and Fermo (2004), propose a new approach based on the idea that individuals consider the costs and benefits of processing information in a given choice set. Their ideas can be applied in real choice settings, but are most easily implemented in stated-preference (SP) settings where researchers have designed choice sets that individuals face on given choice occasions.…”

Section: Choice Set Formation and Attribute Information Processingmentioning

confidence: 99%

Recent Progress on Endogeneity in Choice Modeling

et al. 2005

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Abstract:We describe recent progress in several areas related to endogeneity, including: choice set formation and attention to attributes; interactions among decision-makers; respondents' strategic behavior in answering stated preference choices; models of multiple discrete/continuous choice; distributions of willingness-to-pay; and methods for handling traditionally endogenous explanatory variables.

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“…On the other hand, from the perspective of attentive agents one could regard the excess return predictability as entirely the result of time-varying risk premia. 27 If rp t is the risk premium of attentives, we have E t q t+1 = rp t , where E t is the expectation of attentives. The excess return is then the sum of the risk premium and the expectational error of attentives: q t+1 = rp t + (q t+1 E t q t+1 ).…”

Section: Results For Benchmark Parameterizationmentioning

confidence: 99%

Rational Inattention: A Solution to the Forward Discount Puzzle

Bacchetta¹,

Wincoop²

2005

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The uncovered interest rate parity equation is the cornerstone of most models in international macro.However, this equation does not hold empirically since the forward discount, or interest rate differential, is negatively related to the subsequent change in the exchange rate. This forward discount puzzle is one of the most extensively researched areas in international finance. It implies that excess returns on foreign currency investments are predictable. In this paper we propose a new explanation for this puzzle based on rational inattention. We develop a model where investors face a cost of collecting and processing information. Investors with low information processing costs trade actively, while other investors are inattentive and trade infrequently. We calibrate the model to the data and show that (i) inattention can account for most of the observed predictability of excess returns in the foreign exchange market, (ii) the benefit from frequent trading is relatively small so that few investors choose to be attentive, (iii) average expectational errors about future exchange rates are predictable in a way consistent with survey data for market participants, and (iv) the model can account for the puzzle of delayed overshooting of the exchange rate in response to interest rate shocks.

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The Allocation of Attention: Theory and Evidence

Abstract: JEL classification: C7, C9, D8.

Cited by 42 publications

References 33 publications

Using Internet in Stated Preference Surveys: A Review and Comparison of Survey Modes

Using Internet in Stated Preference Surveys: A Review and Comparison of Survey Modes

Recent Progress on Endogeneity in Choice Modeling

Rational Inattention: A Solution to the Forward Discount Puzzle

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