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Choice By Sequential Procedures

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  • Jose Apesteguia
  • Miguel Angel Ballester

Abstract

We propose a rule of decision-making, the sequential procedure guided by routes, and show that three influential boundedly rational choice models can be equivalently understood as special cases of this rule. In addition, the sequential procedure guided by routes is instrumental in showing that the three models are intimately related. We show that choice with a status-quo bias is a refinement of rationalizability by game trees, which, in turn, is also a refinement of sequential rationalizability. Thus, we provide a sharp taxonomy of these choice models, and show that they all can be understood as choice by sequential procedures.

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Bibliographic Info

Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 615.

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Date of creation: Mar 2012
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Handle: RePEc:bge:wpaper:615

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Keywords: individual rationality; bounded rationality; behavioral economics;

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References

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  1. Tim Beatty & Ian Crawford, 2010. "How demanding is the revealed preference approach to demand," CeMMAP working papers CWP17/10, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  2. de Clippel, Geoffroy & Eliaz, Kfir, 2012. "Reason-based choice: a bargaining rationale for the attraction and compromise effects," Theoretical Economics, Econometric Society, vol. 7(1), January.
  3. Mariotti, Marco & Manzini, Paola, 2012. "Choice by lexicographic semiorders," Theoretical Economics, Econometric Society, vol. 7(1), January.
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  8. Xu, Yongsheng & Zhou, Lin, 2007. "Rationalizability of choice functions by game trees," Journal of Economic Theory, Elsevier, vol. 134(1), pages 548-556, May.
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  10. Jose Apesteguia & Miguel A. Ballester, 2011. "A Measure of Rationality and Welfare," Working Papers 573, Barcelona Graduate School of Economics.
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  17. Christopher Tyson, 2013. "Behavioral implications of shortlisting procedures," Social Choice and Welfare, Springer, vol. 41(4), pages 941-963, October.
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  21. Raphaël Giraud, 2012. "Money matters: an axiomatic theory of the endowment effect," Economic Theory, Springer, vol. 50(2), pages 303-339, June.
  22. García-Sanz, María D. & Alcantud, José Carlos R., 2010. "Rational choice by two sequential criteria," MPRA Paper 21487, University Library of Munich, Germany.
  23. Federico Echenique & Sangmok Lee & Matthew Shum, 2011. "The Money Pump as a Measure of Revealed Preference Violations," Journal of Political Economy, University of Chicago Press, vol. 119(6), pages 1201 - 1223.
  24. Paola Manzini & Marco Mariotti, 2012. "Categorize Then Choose: Boundedly Rational Choice And Welfare," Journal of the European Economic Association, European Economic Association, vol. 10(5), pages 1141-1165, October.
  25. Robin M. Hogarth & Natalia Karelaia, 2005. "Simple Models for Multiattribute Choice with Many Alternatives: When It Does and Does Not Pay to Face Trade-offs with Binary Attributes," Management Science, INFORMS, vol. 51(12), pages 1860-1872, December.
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Citations

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Cited by:
  1. Ludovic Renou & Karl H. Schlag, 2009. "From Ordients to Optimization: Substitution Effects without Differentiability," Discussion Papers in Economics 09/6, Department of Economics, University of Leicester.
  2. Nicolas Houy, 2008. "Progressive knowledge revealed preferences and sequential rationalizability," Working Papers hal-00360546, HAL.
  3. Demuynck, Thomas, 2011. "The computational complexity of rationalizing boundedly rational choice behavior," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 425-433.
  4. Georgios Gerasimou, 2013. "A Behavioural Model of Choice in the Presence of Decision Conflict," Discussion Paper Series, Department of Economics 201302, Department of Economics, University of St. Andrews.
  5. Rohan Dutta & Sean Horan, 2013. "Inferring Rationales from Choice : Identification for Rational Shortlist Methods," Cahiers de recherche 09-2013, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  6. Apesteguia, Jose & Ballester, Miguel A., 2010. "The Computational Complexity of Rationalizing Behavior," Journal of Mathematical Economics, Elsevier, vol. 46(3), pages 356-363, May.

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