A sparsity-based model of bounded rationality

Quarterly Journal of Economics

Volumn 129, Issue 4, 2014, Pages 1661-1710

  Gabaix, Xavier ^a  

^a NEW YORK UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

COMPETITION (ECONOMICS); DEMAND ANALYSIS; MATRIX; MICROECONOMICS; NUMERICAL MODEL; OPTIMIZATION;

EID: 84927654829     PISSN: 00335533     EISSN: 15314650     Source Type: Journal    
DOI: 10.1093/qje/qju024     Document Type: Article

References (82)

1. Abaluck, Jason, and Jonathan Gruber, "Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program". American Economic Review, 101 (2011), 1180-1210.
2. Abel, Andrew, Janice Eberly, and Stavros Panageas, "Optimal Inattention to the Stock Market with Information Costs and Transactions Costs". Econometrica, 81 (2013), 1455-1481.
3. Aguiar, Victor, and Roberto Serrano, "Slutsky Matrix Norms and the Size of Bounded Rationality". Working Paper, Brown University, 2014.
4. Akerlof, George, and Janet Yellen, "Can Small Deviations from Rationality Make Significant Differences in Economic Equilibria?". American Economic Review, 75 (1985), 708-720.
5. Allcott, Hunt, and Nathan Wozny, "Gasoline Prices, Fuel Economy, and the Energy Paradox". Review of Economics and Statistics (forthcoming).
6. Anagol, Santosh, and Hugh Hoikwang Kim, "The Impact of Shrouded Fees: Evidence from a Natural Experiment in the Indian Mutual Funds Market". American Economic Review, 102 (2012), 576-593.
7. Belloni, Alexandre, and Victor Chernozhukov, "l1-Penalized Quantile Regression in High-Dimensional Sparse Models". Annals of Statistics, 39 (2011), 82-130.
8. Bernheim, B. Douglas, and Antonio Rangel, "Beyond Revealed Preference: Choice-Theoretic Foundations for Behavioral Welfare Economics". Quarterly Journal of Economics, 124 (2009), 51-104.
9. Bordalo, Pedro, Nicola Gennaioli, and Andrei Shleifer, "Salience Theory of Choice under Risk". Quarterly Journal of Economics, 127 (2012), 1243-1285.
10. Bordalo, "Salience and Consumer Choice". Journal of Political Economy, 121 (2013), 803-843.
11. Bolton, Patrick, and Antoine Faure-Grimaud, "Thinking Ahead: The Decision Problem". Review of Economic Studies, 76 (2009), 1205-1238.
12. Brocas, Isabelle, and Juan Carillo, "The Brain as a Hierarchical Organization". American Economic Review, 98 (2008), 1312-1346.
13. Brown, Jennifer, Tanjim Hossain, and John Morgan, "Shrouded Attributes and Information Suppression: Evidence from the Field". Quarterly Journal of Economics, 125 (2010), 859-876.
14. Browning, Martin, and Pierre-André Chiappori, "Efficient Intra-Household Allocations-A General Characterization and Empirical Tests". Econometrica, 66 (1998), 1241-1278.
15. Bulow, Jeremy, John Geanakoplos, and Paul Klemperer, "Multimarket Oligopoly: Strategic Substitutes and Complements". Journal of Political Economy, 93 (1985), 488-511.
16. Busse, Meghan, Christopher Knittel, and Florian Zettelmeyer, "Are Consumers Myopic? Evidence from New and Used Car Purchases". American Economic Review, 103 (2012), 220-256.
17. Camerer, Colin F., Teck-Hua Ho, and Juin-Kuan Chong, "A Cognitive Hierarchy Model of Games". Quarterly Journal of Economics, 119 (2004), 861-898.
18. Candès, Emmanuel, and Terence Tao, "Near-Optimal Signal Recovery from Random Projections: Universal Encoding Strategies?". IEEE Transactions on Information Theory, 52 (2006), 5406-5425.
19. Caplin, Andrew, and Mark Dean, "Revealed Preference, Rational Inattention, and Costly Information Acquisition". Working Paper, New York University, 2014.
20. Carroll, Gabriel D., James Choi, David Laibson, Brigitte C. Madrian, and Andrew Metrick, "Optimal Defaults and Active Decisions". Quarterly Journal of Economics, 124 (2009), 1639-1674.
21. Chetty, Raj, "Bounds on Elasticities with Optimization Frictions: A Synthesis of Micro and Macro Evidence on Labor Supply". Econometrica, 80 (2012), 969-1018.
22. Chetty, Raj, Adam Looney, and Kory Kroft, "Salience and Taxation: Theory and Evidence". NBER Working Paper no. 13330, 2007.
23. Chetty, "Salience and Taxation: Theory and Evidence". American Economic Review, 99 (2009), 1145-1177.
24. Cohen, Lauren, and Andrea Frazzini, "Economic Links and Predictable Returns". Journal of Finance, 63 (2008), 1977-2011.
25. Crawford, Vincent, and Nagore Iriberri, "Level-k Auctions: Can Boundedly Rational Strategic Thinking Explain the Winner's Curse and Overbidding in Private-Value Auctions?". Econometrica, 75 (2007), 1721-1770.
26. Croce, Massimiliano, Martin Lettau, and Sydney Ludvigson, "Investor Information, Long-Run Risk, and the Term Structure of Equity". Working Paper, New York University, 2014.
27. Cunningham, Tom, "Biases and Implicit Knowledge". Working Paper, IIES Stockholm, 2013.
28. Debreu, Gérard, "Economies with a Finite Set of Equilibria". Econometrica, 38 (1970), 387-392.
29. DellaVigna, Stefano, "Psychology and Economics: Evidence from the Field". Journal of Economic Literature, 47 (2009), 315-372.
30. DellaVigna, Stefano, and Joshua Pollet, "Demographics and Industry Returns". American Economic Review, 97 (2007), 1667-1702.
31. Donoho, David, "Compressed Sensing". IEEE Transactions on Information Theory, 52 (2006), 1289-1306.
32. Dufwenberg, Martin, Paul Heidhues, Georg Kirchsteiger, Frank Riedel, and Joel Sobel, "Other-Regarding Preferences in General Equilibrium". Review of Economic Studies, 78 (2011), 613-639.
33. Ellison, Glenn, and Sara Fisher Ellison, "Search, Obfuscation, and Price Elasticities on the Internet". Econometrica, 77 (2009), 427-452.
34. Echenique, Federico, Daniel Golovin, and Adam Wierman, "A Revealed Preference Approach to Computational Complexity in Economics". Working Paper, California Institute of Technology, 2013.
35. Eyster, Erik, and Matthew Rabin, "Cursed Equilibrium". Econometrica, 73 (2005), 1623-1672.
36. Fudenberg, Drew, and David Levine, The Theory of Learning in Games (Cambridge, MA: MIT Press, 1998).
37. Fudenberg, Drew, and David Levine, "A Dual-Self Model of Impulse Control". American Economic Review, 96 (2006), 1449-1476.
38. Fuster, Andreas, David Laibson, and Brock Mendel, "Natural Expectations and Macroeconomic Fluctuations". Journal of Economic Perspectives, 24 (2010), 67-84.
39. Gabaix, Xavier, "Sparse Dynamic Programming and Aggregate Fluctuations". Working Paper, New York University, 2013a.
40. Gabaix, "Some Game Theory with Sparsity-Based Bounded Rationality". Working Paper, New York University, 2013b.
41. Gabaix, Xavier, and David Laibson, "The 6D bias and the Equity Premium Puzzle". NBER Macroeconomics Annual, 16 (2002), 257-312.
42. Gabaix, "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets". Quarterly Journal of Economics, 121 (2006), 505-540.
43. Gabaix, Xavier, David Laibson, Guillermo Moloche, and Stephen Weinberg, "Costly Information Acquisition: Experimental Analysis of a Boundedly Rational Model". American Economic Review, 96 (2006), 1043-1068.
44. Galí, Jordi, "The Return of the Wage Phillips Curve". Journal of the European Economic Association, 9 (2011), 436-461.
45. Geanakoplos, John, and Andreu Mas-Colell, "Real Indeterminacy with Financial Assets". Journal of Economic Theory, 47 (1989), 22-38.
46. Geanakoplos, John, and Paul Milgrom, "A Theory of Hierarchies Based on Limited Managerial Attention". Journal of the Japanese and International Economies, 5 (1991), 205-225.
47. Gennaioli, Nicola, and Andrei Shleifer, "What Comes to Mind". Quarterly Journal of Economics, 125 (2010), 1399-1433.
48. Greenwood, Robin, and Samuel G. Hanson, "Waves in Ship Prices and Investment". NBER Working Paper no. 19246, 2013.
49. Grossman, Sanford, and Guy Laroque, "Asset Pricing and Optimal Portfolio Choice in the Presence of Illiquid Durable Consumption Goods". Econometrica, 58 (1990), 25-51.
50. Gul, Faruk, Wolfgang Pesendorfer, and Tomasz Strzalecki, "Coarse Competitive Equilibrium and Extreme Prices". Working Paper, Princeton University, 2014.
51. Hansen, Lars, and Thomas Sargent, Robustness (Princeton, NJ: Princeton University Press, 2007).
52. Hassan, Tarek, and Thomas M. Mertens, "Market Sentiment: A Tragedy of the Commons". American Economic Review, Papers and Proceedings, 101 (2011), 402-405.
53. Hirshleifer, David, Sonya Lim, and Siew Teoh, "Driven to Distraction: Extraneous Events and Underreaction to Earnings News". Journal of Finance, 64 (2009), 2289-2325.
54. Jéhiel, Philippe, "Analogy-Based Expectation Equilibrium". Journal of Economic Theory, 123 (2005), 81-104.
55. Kahneman, Daniel, "Maps of Bounded Rationality: Psychology for Behavioral Economics". American Economic Review, 93 (2003), 1449-1475.
56. Ko00 szegi, Botond, and Adam Szeidl, "A Model of Focusing in Economic Choice". Quarterly Journal of Economics, 128 (2013), 53-104.
57. Kreps, David M., Microeconomic Foundations I (Princeton, NJ: Princeton University Press, 2012).
58. Krusell, Per, and Anthony Smith, "Rules of Thumb in Macroeconomic Equilibrium: A Quantitative Analysis". Journal of Economic Dynamics and Control, 20 (1996), 527-558.
59. Loewenstein, George, Ted O'Donoghue, and Matthew Rabin, "Projection Bias in Predicting Future Utility". Quarterly Journal of Economics, 118 (2003), 1209-1248.
60. Lucas, Robert, "Expectations and the Neutrality of Money". Journal of Economic Theory, 4 (1972), 103-124.
61. Maćkowiak, Bartosz, and Mirko Wiederholt, "Optimal Sticky Prices under Rational Inattention". American Economic Review, 99 (2009), 769-803.
62. Mankiw, N. Gregory, and Ricardo Reis, "Sticky Information versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve". Quarterly Journal of Economics, 117 (2002), 1295-1328.
63. Mas-Colell, Andreu, Michael Whinston, and Jerry Green, Microeconomic Theory (Oxford: Oxford University Press, 1995).
64. Matéjka, Filip, and Christopher Sims, "Discrete Actions in Informationconstrained Tracking Problems". Working Paper, Princeton University, 2010.
65. Miller, George, "The Magical Number Seven Plus or Minus Two: Some Limits on Our Capacity for Processing information". Psychological Review, 63 (1956), 81-97.
66. Mullainathan, Sendhil, "A Memory-Based Model of Bounded Rationality". Quarterly Journal of Economics, 117 (2002), 735-774.
67. Piccione, Michele, and Ran Spiegler, "Price Competition under Limited Comparability". Quarterly Journal of Economics, 127 (2012), 97-135.
68. Radner, Roy, and Timothy Van Zandt, "Real-Time Decentralized Information Processing and Returns to Scale". Economic Theory, 17 (2001), 545-575.
69. Rubinstein, Ariel, Modeling Bounded Rationality (Cambridge, MA: MIT Press, 1998).
70. Samuelson, Paul, Foundations of Economic Analysis (Cambridge, MA: Harvard University Press, 1947).
71. Sargent, Thomas, Bounded Rationality in Macroeconomics (Oxford: Oxford University Press, 1993).
72. Schwartzstein, Joshua, "Selective Attention and Learning". Journal of the European Economic Association.
73. Shafir, Eldar, Peter Diamond, and Amos Tversky, "Money Illusion". Quarterly Journal of Economics, 112 (1997), 341-374.
74. Sims, Christopher, "Implications of Rational Inattention". Journal of Monetary Economics, 50 (2003), 665-690.
75. Stevenson, Betsey, and Justin Wolfers, "Bargaining in the Shadow of the Law: Divorce Laws and Family Distress". Quarterly Journal of Economics, 121 (2006), 267-288.
76. Thaler, Richard H., "Mental Accounting and Consumer Choice". Marketing Science, 4 (1985), 199-214.
77. Tibshirani, Robert, "Regression Shrinkage and Selection via the Lasso". Journal of the Royal Statistical Society B, 58 (1996), 267-288.
78. Tversky, Amos, "Elimination by Aspects: A Theory of Choice". Psychological Review, 79 (1972), 281-299.
79. Tversky, Amos, and Daniel Kahneman, "Judgment under Uncertainty: Heuristics and Biases". Science, 185 (1974), 1124-1130.
80. Varian, Hal, Microeconomic Analysis, 3rd ed. (New York: Norton, 1992).
81. Veldkamp, Laura, Information Choice in Macroeconomics and Finance (Princeton, NJ: Princeton University Press, 2011).
82. Woodford, Michael, "Inattentive Valuation and Reference-Dependent Choice". Working Paper, Columbia University, 2012.