Stochastic Choice: An Optimizing Neuroeconomic Model

A model is proposed in which stochastic choice results from noise in cognitive processing rather than random variation in preferences. The mental process used to make a choice is nonetheless optimal, subject to a constraint on available information-processing capacity that is motivated by neurophysi...

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Veröffentlicht in:The American economic review 2014-05, Vol.104 (5), p.495-500
1. Verfasser: Woodford, Michael
Format: Artikel
Sprache:eng
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Zusammenfassung:A model is proposed in which stochastic choice results from noise in cognitive processing rather than random variation in preferences. The mental process used to make a choice is nonetheless optimal, subject to a constraint on available information-processing capacity that is motivated by neurophysiological evidence. The optimal information-constrained model is found to offer a better fit to experimental data on choice frequencies and reaction times than either a purely mechanical process model of choice (the drift-diffusion model) or an optimizing model with fewer constraints on feasible choice processes (the rational inattention model).
ISSN:0002-8282
1944-7981
DOI:10.1257/aer.104.5.495