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Reason-Based Rationalization

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  • Franz Dietrich
  • Christian List

Abstract

"Reason-based rationalizations" explain an agent's choices by specifying which properties of the options or choice context he/she cares about (the "motivationally salient properties") and how he/she cares about these properties the "fundamental preference relation"). We characterize the choice-behavioural implications of reason-based rationalizability and identify two kinds of context-dependent motivation in a reason-based agent: he/she may (i) care about different properties in different contexts and (ii) care not only about properties of the options, but also about properties relating to the context. Reason-based rationalizations can explain non-classical choice behaviour, including boundedly rational and sophisticated rational behaviour, and predict choices in unobserved contexts, an issue neglected in standard choice theory.

Suggested Citation

  • Franz Dietrich & Christian List, 2014. "Reason-Based Rationalization," STICERD - Theoretical Economics Paper Series 565, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    • Handle: RePEc:cep:stitep:565
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    File URL: https://sticerd.lse.ac.uk/dps/te/te565.pdf
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    References listed on IDEAS

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    JEL classification:

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

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