Optimal similarity judgments in intertemporal choice (and beyond)

• 成果类型: Article
• 署名作者: Adriani, Fabrizio; Sonderegger, Silvia
• 署名单位: University of Leicester; University of Nottingham
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2020.105097
• 发表日期: 2020
• 关键词: Similarity judgments; intertemporal choice; rational inattention; Choice Under Risk

摘要

We use a simple cost-benefit analysis to derive optimal similarity judgments - addressing the question: when should we expect a decision maker to distinguish between different time periods or different prizes? Our key premise is that cognitive resources are costly and are to be deployed only where they really matter. We show that this simple insight can explain a number of observed anomalies, such as: (i) time inconsistency, (ii) magnitude effects, (iii) interval length effects. For each of these phenomena, our approach allows to identify the direction of the bias relative to the benchmark case where cognitive resources are costless. Finally, we show that, when applied to choice under risk, the same insights predict anomalies such as the ratio and certainty effects, and rationalize Rabin's risk aversion paradox. This suggests that the theory may provide a parsimonious explanation of behavioral anomalies in different contexts. (C) 2020 Elsevier Inc. All rights reserved.