Advanced Search
MyIDEAS: Login to save this paper or follow this series

Justifiable choice

Contents:

Author Info

  • Heller, Yuval

Abstract

In many situations a decision maker has incomplete psychological preferences, and the weak axiom of revealed preference (WARP) is often violated. In this paper we relax WARP, and replace it with convex axiom of revealed non-inferiority (CARNI). An alternative x is revealed inferior to y if x is never chosen when y is in the convex hull of the choice set. CARNI requires that an alternative is chosen if it is not inferior to all other alternatives in the convex hull of the choice set. We apply CARNI in two models and axiomatize non-binary choice correspondences. In the first model we impose the standard axioms of expected utility model, except that WARP is replaced by CARNI. We prove that it has a multiple-utility representation: There is a unique convex set of vN-M utilities, such that an alternative is chosen if and only if it is best with respect to one of the utilities in this set. In the second model we impose the axioms of the subjective expected utility, relax WARP in a similar way, and get multiple-prior representation: There is a unique convex set of priors over the state of nature, such that an alternative is chosen if and only if it is best with respect to one of these priors. Both representations are closely-related to psychological insights of justifiable choice: The decision maker has several ways to evaluate acts, each with a different justification. Observable payoff-irrelevant information during the choice triggers her to use a specific “anchoring” justification for the evaluation of the alternatives.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://mpra.ub.uni-muenchen.de/15645/
File Function: original version
Download Restriction: no

File URL: http://mpra.ub.uni-muenchen.de/54903/
File Function: revised version
Download Restriction: no

File URL: http://mpra.ub.uni-muenchen.de/17018/
File Function: revised version
Download Restriction: no

File URL: http://mpra.ub.uni-muenchen.de/25892/
File Function: revised version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 15645.

as in new window
Length:
Date of creation: 10 Jun 2009
Date of revision:
Handle: RePEc:pra:mprapa:15645

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: uncertainty; multiple priors; multiple utilities; incomplete preferences; anchoring; framing; non-binary choice.;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Paola Manzini & Marco Mariotti, 2007. "Sequentially Rationalizable Choice," American Economic Review, American Economic Association, American Economic Association, vol. 97(5), pages 1824-1839, December.
  2. Luca Rigotti & Chris Shannon=20, 2002. "Uncertainty and Risk in Financial Markets," Game Theory and Information, EconWPA 0201001, EconWPA.
  3. John E. Roemer, . "The Democratic Political Economy Of Progressive Income Taxation," Department of Economics, California Davis - Department of Economics 97-11, California Davis - Department of Economics.
  4. Gil Kalai & Ariel Rubinstein & Ran Spiegler, 2001. "Rationalizing Choice Functions by Multiple Rationales," Discussion Paper Series, The Center for the Study of Rationality, Hebrew University, Jerusalem dp278, The Center for the Study of Rationality, Hebrew University, Jerusalem.
  5. Klaus Nehring, 1997. "Rational choice and revealed preference without binariness," Social Choice and Welfare, Springer, Springer, vol. 14(3), pages 403-425.
  6. Juan Dubra & Fabio Maacheroni & Efe A. Ok, 2001. "Expected Utility Theory without the Completeness Axiom," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1294, Cowles Foundation for Research in Economics, Yale University.
  7. Fishburn, Peter C, 1991. " Nontransitive Preferences in Decision Theory," Journal of Risk and Uncertainty, Springer, Springer, vol. 4(2), pages 113-34, April.
  8. Fudenberg, D. & Levine, D.K., 1991. "Self-Confirming Equilibrium ," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 581, Massachusetts Institute of Technology (MIT), Department of Economics.
  9. Eliaz, Kfir & Ok, Efe A., 2006. "Indifference or indecisiveness? Choice-theoretic foundations of incomplete preferences," Games and Economic Behavior, Elsevier, Elsevier, vol. 56(1), pages 61-86, July.
  10. Lehrer, Ehud & Teper, Roee, 2011. "Justifiable preferences," Journal of Economic Theory, Elsevier, Elsevier, vol. 146(2), pages 762-774, March.
  11. Schmeidler, David, 1989. "Subjective Probability and Expected Utility without Additivity," Econometrica, Econometric Society, Econometric Society, vol. 57(3), pages 571-87, May.
  12. Sen, Amartya K, 1971. "Choice Functions and Revealed Preference," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 38(115), pages 307-17, July.
  13. Peter Klibanoff & Massimo Marinacci & Sujoy Mukerji, 2002. "A smooth model of decision making under ambiguity," ICER Working Papers - Applied Mathematics Series, ICER - International Centre for Economic Research 11-2003, ICER - International Centre for Economic Research, revised Apr 2003.
  14. Ariel Rubinstein & Asher Wolinsky, 1991. "Rationalizable Conjectural Equilibrium: Between Nash and Rationalizability," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 933, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  15. B. Douglas Bernheim & Antonio Rangel, 2009. "Beyond Revealed Preference: Choice-Theoretic Foundations for Behavioral Welfare Economics-super-," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 124(1), pages 51-104, February.
  16. Fabio Maccheroni & Massimo Marinacci & Aldo Rustichini, 2006. "Ambiguity Aversion, Robustness, and the Variational Representation of Preferences," Econometrica, Econometric Society, Econometric Society, vol. 74(6), pages 1447-1498, November.
  17. Fishburn, Peter C, 1970. "Intransitive Individual Indifference and Transitive Majorities," Econometrica, Econometric Society, Econometric Society, vol. 38(3), pages 482-89, May.
  18. Itzhak Gilboa & Fabio Maccheroni & Massimo Marinacci & David Schmeidler, 2010. "Objective and Subjective Rationality in a Multiple Prior Model," Econometrica, Econometric Society, Econometric Society, vol. 78(2), pages 755-770, 03.
  19. Gilboa, Itzhak & Schmeidler, David, 1989. "Maxmin expected utility with non-unique prior," Journal of Mathematical Economics, Elsevier, vol. 18(2), pages 141-153, April.
  20. Amos Tversky & Itamar Simonson, 1993. "Context-Dependent Preferences," Management Science, INFORMS, INFORMS, vol. 39(10), pages 1179-1189, October.
  21. R. Duncan Luce & Detlof von Winterfeldt, 1994. "What Common Ground Exists for Descriptive, Prescriptive, and Normative Utility Theories?," Management Science, INFORMS, INFORMS, vol. 40(2), pages 263-279, February.
  22. Kalai, Ehud & Lehrer, Ehud, 1993. "Subjective Equilibrium in Repeated Games," Econometrica, Econometric Society, Econometric Society, vol. 61(5), pages 1231-40, September.
  23. Ghirardato, Paolo & Maccheroni, Fabio & Marinacci, Massimo, 2004. "Differentiating ambiguity and ambiguity attitude," Journal of Economic Theory, Elsevier, Elsevier, vol. 118(2), pages 133-173, October.
  24. De Clippel, Geoffroy & Eliaz, Kfir, 2009. "Reason-Based Choice: A Bargaining Rationale for the Attraction and Compromise Effects," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7414, C.E.P.R. Discussion Papers.
  25. Kim, Taesung & Richter, Marcel K., 1986. "Nontransitive-nontotal consumer theory," Journal of Economic Theory, Elsevier, Elsevier, vol. 38(2), pages 324-363, April.
  26. Heath, Chip & Tversky, Amos, 1991. " Preference and Belief: Ambiguity and Competence in Choice under Uncertainty," Journal of Risk and Uncertainty, Springer, Springer, vol. 4(1), pages 5-28, January.
  27. Mandler, Michael, 2005. "Incomplete preferences and rational intransitivity of choice," Games and Economic Behavior, Elsevier, Elsevier, vol. 50(2), pages 255-277, February.
  28. Deb, Rajat, 1983. "Binariness and rational choice," Mathematical Social Sciences, Elsevier, Elsevier, vol. 5(1), pages 97-105, August.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:15645. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.