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| Main Author: | |
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| Format: | Preprint |
| Published: |
2024
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| Subjects: | |
| Online Access: | https://arxiv.org/abs/2402.09789 |
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| _version_ | 1866911777641463808 |
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| author | Bustos, Martin |
| author_facet | Bustos, Martin |
| contents | I provide a model of rational inattention with heterogeneity and prove it is observationally equivalent to a state-dependent stochastic choice model subject to attention costs. I demonstrate that additive separability of unobservable heterogeneity, together with an independence assumption, suffice for the empirical model to admit a representative agent. Using conditional probabilities, I show how to identify: how covariates affect the desirability of goods, (a measure of) welfare, factual changes in welfare, and bounds on counterfactual market shares. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2402_09789 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Identification with Posterior-Separable Information Costs Bustos, Martin Econometrics I provide a model of rational inattention with heterogeneity and prove it is observationally equivalent to a state-dependent stochastic choice model subject to attention costs. I demonstrate that additive separability of unobservable heterogeneity, together with an independence assumption, suffice for the empirical model to admit a representative agent. Using conditional probabilities, I show how to identify: how covariates affect the desirability of goods, (a measure of) welfare, factual changes in welfare, and bounds on counterfactual market shares. |
| title | Identification with Posterior-Separable Information Costs |
| topic | Econometrics |
| url | https://arxiv.org/abs/2402.09789 |