Multiple attribute search is a central feature of economic life: we consider much more than price when purchasing a home, and more than wage when choosing a job. Nevertheless, while single attribute search problems have been studied extensively, little is known about optimal search in multiple attribute environments. I introduce a partial characterization of optimal sequential search in a probl...

We invent Implicit Marshallian Demands, a new type of demand function that combines desirable features of Hicksian and Marshallian demand functions. We propose and estimate the Exact Af ne Stone Index (EASI) Implicit Marshallian Demand system. Like the Almost Ideal Demand (AID) system, EASI budget shares are linear in parameters given real expenditures. However, unlike the AID, EASI demands can...

There is well-established evidence that decision makers consistently fail to consider all available options. Instead, they restrict attention to only a subset of alternatives and then undertake a more detailed analysis of this reduced set. This systematic lack of consideration of available options can lead to a “more is less” effect, where excess of options can be welfare-reducing for a decisio...

Due to factors such as temptation, choices may not respect normative preference (the agent’s own, subjective view of what constitutes his welfare). Nevertheless, the evidence on preference reversals suggests a means of recovering normative preference from choice. A de…nition of normative preference in terms of choices between su¢ ciently delayed alternatives is formulated and studied. Mild cond...

Attitudes serving the social-identity function relate nonsocial objects (e.g., products) to social objects (e.g., people). As new products tend to be more exciting than old, familiar products, the authors suggest that these attitudes in ̄uence innovativeness and opinion leadership. Based on recent research on attitude functions and adoption of consumer innovations, this research examines the rel...

This paper analyzes optimal hedging of a tradable risk (e.g. price risk or exchange rate risk) with forward contracts in the presence of untradable in ation risk. Utility is de ned over real wealth. Optimal forward positions are derived relative to a given initial exposure in the tradable risk. A nominally unbiased forward market usually implies a non-zero real risk premium and hence some risk ...

Rather than having precise preferences consistent with a single utility function over commodity bundles, individuals are assumed to have imprecise preferences with a set of possible utility functions, one of which is the true one. When attention is devoted to the task the set of utility functions contracts, making preferences more precise. This increases the individual’s willingness to pay for ...

This paper provides two representation theorems for time preferences. They both cover as special cases a variety of time preference models considered in the experimental and theoretical literatures on intertemporal choice. In particular, similarity relations on time and outcomes, exponential, quasi-hyperbolic and hyperbolic discounting are special cases of the theorems. This approach identi…es ...

When consumers are not fully cognizant of the value of a good, they use their experience to estimate its value. Their past experience is selective if it only contains transactions that were carried out but not potential transactions that were not implemented. Failing to account for this selectivity may result in biased estimates of the post-purchase value. This paper presents a bounded rational...

This paper studies welfare criteria under an environment in which a decision maker is endowed with a nontransitive preference relation. In such an environment, the classical utilitarian welfare criterion may not identify the welfare order, and the problem of maximizing the decision maker’s welfare becomes ambiguous. In order to find a criterion that applies to nontransitive preference relations...