Completing Incomplete Revealed Preference under Limited Attention

This paper discusses how to improve the identification of the preference of a decision maker (DM) with limited attention proposed by Masatlioglu, Nakajima, and Ozbay (2012). Their identification method relies on choice reversals so the obtained revealed preference is often very incomplete. We propose three approaches to address this problem. The first one is accommodating to a model-free approach, which respects DM’s choice in making a welfare analysis, as long as it does not contradict MNO’s revealed preference. The second is to incorporate exogenously obtained decision maker’s attention/inattention information into MNO’s model. The third one is to take framings that influence DM’s attention into effect for the identification. JEL Classification Numbers: D11, D60, D81.