Choice simplification: A theory of mental budgeting and naive diversification
Koszegi and Matejka model an agent with costly attention who makes multiproduct consumption choices as tastes, opportunities and prices shift. The agent simplifies by focusing on a few key considerations; for substitutable products she tends to set mental budgets, and for complements she may choose a fixed, unconsidered mix. Quarterly Journal of Economics 135(2), 1153-1207, 2020. No figures are used.
Koszegi and Matejka model an agent with costly attention who makes multiproduct consumption choices as tastes, opportunities and prices shift. The agent simplifies by focusing on a few key considerations; for substitutable products she tends to set mental budgets, and for complements she may choose a fixed, unconsidered mix. Quarterly Journal of Economics 135(2), 1153-1207, 2020. No figures are used.
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Kőszegi, B., & Matějka, F. (2020). Choice simplification: A theory of mental budgeting and naive diversification. The Quarterly Journal of Economics, 135(2), 1153-1207. doi:10.1093/qje/qjz043 https://doi.org/10.1093/qje/qjz043