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Bounded rationality is rare

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  • Giarlotta, Alfio
  • Petralia, Angelo
  • Watson, Stephen

Abstract

Most bounded rationality properties in the literature are inherited by subchoices, but are not satisfied by at least one subchoice of most choice functions. Therefore the fraction of choice functions that can be explained by these models goes to zero as the number of items tends to infinity. Numerical estimates confirm the rarity of bounded rationality even for small sets of alternatives.

Suggested Citation

  • Giarlotta, Alfio & Petralia, Angelo & Watson, Stephen, 2022. "Bounded rationality is rare," Journal of Economic Theory, Elsevier, vol. 204(C).
    • Handle: RePEc:eee:jetheo:v:204:y:2022:i:c:s0022053122000990
    DOI: 10.1016/j.jet.2022.105509
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    References listed on IDEAS

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    Cited by:

    1. Alfio Giarlotta & Angelo Petralia & Stephen Watson, 2022. "On the number of non-isomorphic choices on four elements," Papers 2206.06840, arXiv.org.
    2. Davide Carpentiere & Angelo Petralia, 2023. "Identification of consideration sets from choice data," Papers 2302.00978, arXiv.org, revised Mar 2024.
    3. Alfio Giarlotta & Angelo Petralia & Stephen Watson, 2022. "Semantics meets attractiveness: Choice by salience," Papers 2204.08798, arXiv.org, revised Aug 2022.

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    More about this item

    Keywords

    Bounded rationality; Hereditary property; Choice isomorphism; Rarity; Numerical estimates;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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