2025/08/08 by Engh, Chris
#FOS: Economics and business #Theoretical Economics (econ.TH)
paper · doi:10.48550/arxiv.2508.05939
We study a generalization of the state-action rational inattention model with two dimensions of uncertainty: states and hedonic characteristics. The resulting conditional choice probability takes a familiar weighted multinomial logit form, but in contrast to the state-action model, is unique and is not a corner solution. The model imposes testable restrictions on the behavior of choice probabilities in markets with product entry.