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Pairwise normalization: A neuroeconomic theory of multi-attribute choice

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  • Landry, Peter
  • Webb, Ryan

Abstract

We present a theory of multi-attribute choice founded in the neuroscience of perception. Valuation is formed through a series of pairwise, attribute-level comparisons implemented by (divisive) normalization — a form of relative value coding observed across sensory modalities and in species ranging from honeybees to humans. Such “pairwise normalization” captures a broad range of behavioral regularities in multi-attribute choice, including the compromise and asymmetric dominance effects, the diversification bias in allocation decisions, and majority-rule preference cycles.

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  • Landry, Peter & Webb, Ryan, 2021. "Pairwise normalization: A neuroeconomic theory of multi-attribute choice," Journal of Economic Theory, Elsevier, vol. 193(C).
    • Handle: RePEc:eee:jetheo:v:193:y:2021:i:c:s0022053121000387
    DOI: 10.1016/j.jet.2021.105221
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    2. Herweg, Fabian & Weinschenk, Philipp, 2022. "Multi-attribute heuristics and intertemporal choices," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 174-181.
    3. Jason Somerville, 2022. "Range‐Dependent Attribute Weighting in Consumer Choice: An Experimental Test," Econometrica, Econometric Society, vol. 90(2), pages 799-830, March.
    4. Brocas, Isabelle & Carrillo, Juan D., 2021. "Value computation and modulation: A neuroeconomic theory of self-control as constrained optimization," Journal of Economic Theory, Elsevier, vol. 198(C).
    5. Cassidy Shubatt & Jeffrey Yang, 2024. "Similarity and Comparison Complexity," Papers 2401.17578, arXiv.org.
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    7. Elias Bouacida, 2021. "Identifying Choice Correspondences," Working Papers 327800275, Lancaster University Management School, Economics Department.
    8. Changkuk Im, 2023. "Accurate Quality Elicitation in a Multi-Attribute Choice Setting," Papers 2309.00114, arXiv.org, revised Dec 2023.

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    More about this item

    Keywords

    Neuroeconomics; Consumer theory; Multi-attribute choice; Decoy effects;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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