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Peer Effects in Random Consideration Sets

Time: 12 August (Friday) 14.00 Moscow time
Speaker: Nail Kashaev (University of Western Ontario)
Title: Peer Effects in Random Consideration Sets

Field of study
"Econometrics, Economic Theory, Industrial Organization"

What problem is your research intended to solve?
"Instead of looking at the set of all available alternatives, people often consider only a small subsets of it -- a consideration set. Ignoring latent consideration sets in analysis of choices of people may lead to incorrect estimation of preferences and thus to misleading policy recommendations. It is still not clear how the consideration sets are formed and what their determinants are. This paper builds and analyzes a dynamic model where choices of friends shape consideration set."

What did your research find?
"We establish the identification of the model we propose and provide an estimator of model parameters. Using our model we analyze the determinants of the visual focus of attention using an experimental dataset and find robust evidence of so-called left-to-right bias."

Abstract: We develop a dynamic model of discrete choice that incorporates peer effects into random consideration sets. We characterize the equilibrium behavior and study the empirical content of the model. In our setup, changes in the choices of friends affect the distribution of the consideration sets. We exploit this variation to recover the ranking of preferences, attention mechanisms, and network connections. These nonparametric identification results allow unrestricted heterogeneity across people and do not rely on the variation of either covariates or the set of available options. Our methodology leads to a maximum-likelihood estimator that performs well in simulations. We apply our results to an experimental dataset that has been designed to study the visual focus of attention.

More information, a link to the research and the upcoming seminar here.
Seminar will not be streamed or recorded.

We are looking forward to seeing you!