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Rationalizing Boundedly Rational Choice: Sequential Rationalizability and Rational Shortlist Methods

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Author Info

  • Manzini, Paola

    ()
    (University of St. Andrews)

  • Mariotti, Marco

    ()
    (University of St. Andrews)

Abstract

A sequentially rationalizable choice function is a choice function which can be obtained by applying sequentially a fixed set of asymmetric binary relations (rationales). A Rational ShortlistMethod (RSM) is a choice function which is sequentially rationalizable by two rationales. These concepts translate into economic language some human choice heuristics studied in psychology. We provide a full characterization of RSMs and study some properties of sequential rationalizability. These properties allow some degree of menu dependence in choice.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1239.

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Length: 28 pages
Date of creation: Aug 2004
Date of revision:
Publication status: published as "Sequentially Rationalizable Choice" in: American Economic Review, 2007, 97 (5), 1824-1839
Handle: RePEc:iza:izadps:dp1239

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Related research

Keywords: incomplete preferences; intransitive choice; bounded rationality; menu dependence; rationalizability of choice;

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References

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  1. Gil Kalai & Ariel Rubenstein & Ran Spiegler, 2001. "Rationalizing Choice Functions by Multiple Rationales," Economics Working Papers 0010, Institute for Advanced Study, School of Social Science.
  2. Amartya Sen, 1996. "Maximization and the Act of Choice," Harvard Institute of Economic Research Working Papers 1766, Harvard - Institute of Economic Research.
  3. Mandler, Michael, 2005. "Incomplete preferences and rational intransitivity of choice," Games and Economic Behavior, Elsevier, vol. 50(2), pages 255-277, February.
  4. Paola Manzini & Marco Mariotti, 2002. "A vague theory of choice over time," Game Theory and Information, EconWPA 0203004, EconWPA, revised 21 Jun 2002.
  5. Wulf Gaertner & Yongsheng Xu,, . "On the Structure of Choice Under Different External References," Discussion Papers 97/19, University of Nottingham, School of Economics.
  6. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, Econometric Society, vol. 47(2), pages 263-91, March.
  7. Eliaz, Kfir & Ok, Efe A., 2006. "Indifference or indecisiveness? Choice-theoretic foundations of incomplete preferences," Games and Economic Behavior, Elsevier, vol. 56(1), pages 61-86, July.
  8. Wulf Gaertner & Yongsheng Xu, 1999. "On rationalizability of choice functions: A characterization of the median," Social Choice and Welfare, Springer, vol. 16(4), pages 629-638.
  9. Masatlioglu, Yusufcan & Ok, Efe A., 2005. "Rational choice with status quo bias," Journal of Economic Theory, Elsevier, vol. 121(1), pages 1-29, March.
  10. Baigent, Nick & Gaertner, Wulf, 1996. "Never Choose the Uniquely Largest: A Characterization," Economic Theory, Springer, vol. 8(2), pages 239-49, August.
  11. Klaus Nehring, 1997. "Rational choice and revealed preference without binariness," Social Choice and Welfare, Springer, vol. 14(3), pages 403-425.
  12. Moulin, Herve, 1994. "Social choice," Handbook of Game Theory with Economic Applications, Elsevier, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 31, pages 1091-1125 Elsevier.
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Cited by:
  1. Ariel Rubinstein & Yuval Salant, 2006. "Two Comments on the Principle of Revealed Preference," Levine's Bibliography 321307000000000272, UCLA Department of Economics.
  2. José Alcantud, 2006. "Notes and Comments: Stochastic demand correspondences and their aggregation properties," Decisions in Economics and Finance, Springer, vol. 29(1), pages 55-69, 05.

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