主题： Testing Rationally Inattentive Consumers’ Behavior in Residential Water Market
Xiangrui Wang is an Ph.D. candidate in Economics at Washington State University. His research fields include Natural Resource Economics, Agricultural Economics, and Consumers Economics in Food Industry. Currently he is working on several papers focusing on different topics like “Modeling Rationally Inattentive Consumers’ Behavior in Residential Water Market”, “Divestiture May Fail as a Merger Remedy: The Case of the US Beer Industry”, “U.S. Ethanol Mandate, Agricultural Land Use, and Water Pollution”, “A Welfare Analysis of Charging Inattentive Consumers with Increasing Block Pricing”, and “Tax Avoidance for City-Level Sugar-Sweetened-Beverage Excise Tax: The Case of Berkeley”.
This talk is about consumer-side water management policy. Rationally inattentive consumers tend to apply simplified heuristics for making decision. We test the hypothesis of rational inattention in the context of residential water consumption where water bills typically account for a small enough portion of household expenditures that they attract only occasional attention. We begin by rigorously testing whether residential water customers display evidence of rational inattention. We then propose a heuristic water demand model for rationally inattentive consumers to explore their decision mechanism. We predict out-of-sample water consumption to gauge the performance of this model. Our heuristic demand model performs well relative to the discrete/continuous choice model predicated on attentive, fully informed decision makers.