Citation:
Gabaix X. A Sparsity-Based Model of Bounded Rationality. Quarterly Journal of Economics. 2014;129 (4) :1661-1710.
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Online Appendix | 564 KB |
Abstract:
I propose a tractable behavioral "max" operator, the sparse max. It yields a behavioral version of basic consumer theory (e.g., Marshallian demand, Slutsky matrix, nominal illusion) and equilibrium theory (e.g., Arrow-Debreu, Edgeworth boxes.)