Original title: Optimal menu when agents make mistakes
Authors: Mikhalishchev, Sergei
Document type: Research reports
Year: 2020
Language: eng
Series: CERGE-EI Working Paper Series, volume: 670
Abstract: This paper studies a welfare maximization problem with heterogeneous agents. A social planner designs a menu of choices for agents who misperceive either the properties of options or their own preferences. When agents misperceive the true properties of alternatives, it is optimal to limit a menu when the probability of a mistaken choice is moderately high. Additionally, it could be optimal to construct the menu with more distinct alternatives. However, when agents misperceive their own tastes, it is optimal to limit choice only when agents choose randomly, and to propose alternatives that are more similar when there is a greater probability of agents making a mistake.
Keywords: bounded rationality; discrete choice; optimal menu
Project no.: 678081

Institution: Economics Institute AS ČR (web)
Document availability information: Fulltext is available at external website.
External URL: https://www.cerge-ei.cz/pdf/wp/Wp670.pdf
Original record: http://hdl.handle.net/11104/0311506

Permalink: http://www.nusl.cz/ntk/nusl-432265


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