Rationalizing Boundedly Rational Choice: Sequential Rationalizability and Rational Shortlist Methods
AbstractA 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 InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1239.
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
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- D0 - Microeconomics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-09 (All new papers)
- NEP-CBE-2004-08-09 (Cognitive & Behavioural Economics)
- NEP-DCM-2004-08-09 (Discrete Choice Models)
- NEP-EVO-2004-08-09 (Evolutionary Economics)
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