A Unique Costly Contemplation Representation a Unique Costly Contemplation Representation

Content Provider	Semantic Scholar
Author	Sarver, Todd
Copyright Year	2005
Abstract	The copyright to this Article is held by the Econometric Society. It may be downloaded, printed and reproduced only for educational or research purposes, including use in course packs. No downloading or copying may be done for any commercial purpose without the explicit permission of the Econometric Society. For such commercial purposes contact the Office of the Econometric Society (contact information may be found at the website http://www.econometricsociety.org or in the back cover of Econometrica). This statement must be included on all copies of this Article that are made available electronically or in any other format. 1 We study preferences over menus which can be represented as if the individual is uncertain of her tastes, but is able to engage in costly contemplation before selecting an alternative from a menu. Since contemplation is costly, our key axiom, aversion to contingent planning, reflects the individual's preference to learn the menu from which she will be choosing prior to engaging in contemplation about her tastes for the alternatives. Our representation models contemplation strategies as subjective signals over a subjective state space. The subjectivity of the state space and the information structure in our representation makes it difficult to identify them from the preference. To overcome this issue, we show that each signal can be modeled in reduced form as a measure over ex post utility functions without reference to a state space. We show that in this reduced-form representation, the set of measures and their costs are uniquely identified. Finally, we provide a measure of comparative contemplation costs and characterize the special case of our representation where contemplation is costless.
File Format	PDF HTM / HTML
Alternate Webpage(s)	http://faculty.wcas.northwestern.edu/~tds107/files/Ergin-Sarver-contemplation.pdf
Language	English
Access Restriction	Open
Content Type	Text
Resource Type	Article