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Inferring Rationales from Choice : Identification for Rational Shortlist Methods

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  • Rohan Dutta
  • Sean Horan

Abstract

A wide variety of choice behavior inconsistent with preference maximization can be explained by Manzini and Mariotti's Rational Shortlist Methods. Choices are made by sequentially applying a pair of asymmetric binary relations (rationales) to eliminate inferior alternatives. Manzini and Mariotti's axiomatic treatment elegantly describes which behavior can be explained by this model. However, it leaves unanswered what can be inferred, from observed behavior, about the underlying rationales. Establishing this connection is fundamental not only for applied and empirical work but also for meaningful welfare analysis. Our results tightly characterize the surprisingly rich relationship between behavior and the underlying rationales.

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Bibliographic Info

Paper provided by Centre interuniversitaire de recherche en économie quantitative, CIREQ in its series Cahiers de recherche with number 09-2013.

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Length: 51 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:mtl:montec:09-2013

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Related research

Keywords: Revealed Preference; Identification; Uniqueness; Two-stage Choice Procedures; Behavioral Industrial Organization; Comparative Advertising; Decoy Marketing; Welfare.;

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References

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  1. Winand Emons & Claude Fluet, 2011. "Non-Comparative versus Comparative Advertising of Quality," Cahiers de recherche 1139, CIRPEE.
  2. Christopher J. Tyson, 2012. "Behavioral Implications of Shortlisting Procedures," Working Papers 697, Queen Mary, University of London, School of Economics and Finance.
  3. B. Douglas Bernheim & Antonio Rangel, 2007. "Toward Choice-Theoretic Foundations for Behavioral Welfare Economics," American Economic Review, American Economic Association, vol. 97(2), pages 464-470, May.
  4. Houy, Nicolas & Tadenuma, Koichi, 2007. "Lexicographic Compositions of Multiple Criteria for Decision Making," Discussion Papers 2007-13, Graduate School of Economics, Hitotsubashi University.
  5. García-Sanz, María D. & Alcantud, José Carlos R., 2010. "Rational choice by two sequential criteria," MPRA Paper 21487, University Library of Munich, Germany.
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  7. Eddie Dekel & Barton L. Lipman, 2009. "How (Not) to Do Decision Theory," Levine's Working Paper Archive 814577000000000339, David K. Levine.
  8. Renault, Régis & Anderson, Simon P., 2009. "Comparative advertising: disclosing horizontal match information," Economics Papers from University Paris Dauphine 123456789/12478, Paris Dauphine University.
  9. Ariel Rubinstein & Yuval Salant, 2009. "Eliciting Welfare Preferences from Behavioral Datasets," Levine's Working Paper Archive 814577000000000374, David K. Levine.
  10. Spiegler, Ran, 2014. "Bounded Rationality and Industrial Organization," OUP Catalogue, Oxford University Press, number 9780199334261, October.
  11. Geoffroy de Clippel & Kareen Rozen, 2012. "Bounded Rationality and Limited Datasets: Testable Implications, Identifiability, and Out-of-Sample Prediction," Working Papers 2012-7, Brown University, Department of Economics.
  12. Sen, Amartya K, 1971. "Choice Functions and Revealed Preference," Review of Economic Studies, Wiley Blackwell, vol. 38(115), pages 307-17, July.
  13. Huber, Joel & Payne, John W & Puto, Christopher, 1982. " Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis," Journal of Consumer Research, University of Chicago Press, vol. 9(1), pages 90-98, June.
  14. Eric Danan, 2010. "Randomization vs. selection: How to choose in the absence of preference?," Post-Print hal-00872249, HAL.
  15. Uwe Dulleck & Franz Hackl & Bernhard Weiss & Rudolf Winter‐Ebmer, 2011. "Buying Online: An Analysis of Shopbot Visitors," German Economic Review, Verein für Socialpolitik, vol. 12(4), pages 395-408, November.
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Cited by:
  1. Gent Bajraj & Levent Ülkü, 2013. "Choosing two Finalists and the Winner," Working Papers 1305, Centro de Investigacion Economica, ITAM.
  2. Matsuki, Jun & Tadenuma, Koichi, 2013. "Choice via Grouping Procedures," Discussion Papers 2013-08, Graduate School of Economics, Hitotsubashi University.

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