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A Unique costly contemplation representation

Publication ,  Journal Article
Ergin, H; Sarver, T
Published in: Econometrica
July 1, 2010

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. © 2010 The Econometric Society.

Duke Scholars

Published In

Econometrica

DOI

EISSN

1468-0262

ISSN

0012-9682

Publication Date

July 1, 2010

Volume

78

Issue

4

Start / End Page

1285 / 1339

Related Subject Headings

  • Econometrics
  • 1403 Econometrics
  • 1402 Applied Economics
  • 1401 Economic Theory
 

Citation

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MLA
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Ergin, H., & Sarver, T. (2010). A Unique costly contemplation representation. Econometrica, 78(4), 1285–1339. https://doi.org/10.3982/ECTA7801
Ergin, H., and T. Sarver. “A Unique costly contemplation representation.” Econometrica 78, no. 4 (July 1, 2010): 1285–1339. https://doi.org/10.3982/ECTA7801.
Ergin H, Sarver T. A Unique costly contemplation representation. Econometrica. 2010 Jul 1;78(4):1285–339.
Ergin, H., and T. Sarver. “A Unique costly contemplation representation.” Econometrica, vol. 78, no. 4, July 2010, pp. 1285–339. Scopus, doi:10.3982/ECTA7801.
Ergin H, Sarver T. A Unique costly contemplation representation. Econometrica. 2010 Jul 1;78(4):1285–1339.
Journal cover image

Published In

Econometrica

DOI

EISSN

1468-0262

ISSN

0012-9682

Publication Date

July 1, 2010

Volume

78

Issue

4

Start / End Page

1285 / 1339

Related Subject Headings

  • Econometrics
  • 1403 Econometrics
  • 1402 Applied Economics
  • 1401 Economic Theory