Prior-Free Optimality and Satisficing - A Common Framework and its Experimental Implementation -
AbstractSimilar to welfare economics where with(out) interpersonal comparisons one defines unique (set-valued) welfare (Pareto) optima, we present a framework for one-person decision making where with(out) a prior probability distribution individual optimality prescribes usually a unique (set of) choice(s). Satisfiable aspirations in the sense that there exists some choice guaranteeing them define a much larger choice set whose intersection with the set of prior-free optimal choices is never empty. We also review experimental procedures and results which incentivize aspiration formation and reject even prior-free optimality experimentally.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2008-055.
Date of creation: 02 Jul 2008
Date of revision:
Satisficing; bounded rationality; optimality;
Find related papers by JEL classification:
- B4 - Schools of Economic Thought and Methodology - - Economic Methodology
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D10 - Microeconomics - - Household Behavior - - - General
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- NEP-CBE-2008-07-20 (Cognitive & Behavioural Economics)
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- NEP-EXP-2008-07-20 (Experimental Economics)
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