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(F)Lexicographic shortlist method

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  • Christopher Kops

    (University of Cologne)

Abstract

Standard rational choice relies on the assumption that a decision maker is certain about her preferences. The psychology literature, on the other hand, provides well-established evidence that consumers are often uncertain about the true value of alternatives. This is particularly so when alternatives have several attributes and focusing on different attributes shifts a decision maker’s ranking of alternatives. In this paper, we propose and behaviorally characterize a new model of boundedly rational choice that formalizes these insights from psychology into a choice procedure. Simply put, our approach introduces menu dependence into the idea of lexicographic preferences. We study some of its properties and highlight how this procedure exacerbates any welfare judgments.

Suggested Citation

  • Christopher Kops, 2018. "(F)Lexicographic shortlist method," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(1), pages 79-97, January.
    • Handle: RePEc:spr:joecth:v:65:y:2018:i:1:d:10.1007_s00199-016-1006-z
    DOI: 10.1007/s00199-016-1006-z
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    References listed on IDEAS

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    Cited by:

    1. Kops, Christopher, 2022. "Cluster-shortlisted choice," Journal of Mathematical Economics, Elsevier, vol. 102(C).

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    More about this item

    Keywords

    Menu-dependent choice; Rational shortlist method; Violations of WARP; Boundedly rational choice; Lexicographic preferences;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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