Two-stage Boundedly Rational Choice Procedures: Theory and Experimental Evidence
AbstractWe study and test a class of boundedly rational models of decision making which rely on sequential eliminative heuristics. We formalize two sequential decision procedures, both inspired by plausible models popular among several psychologists and marketing scientists. However we follow a standard `revealed preference' economic approach by fully characterizing these procedures by few, simple and testable conditions on observed choice. Then we test the models (as well as the standard utility maximization model) with experimental data. We find that the large majority of individuals behave in a way consistent with one of our procedures, and inconsistent with the utility maximization model.
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Bibliographic InfoPaper provided by Queen Mary, University of London, School of Economics and Finance in its series Working Papers with number 561.
Date of creation: Jul 2006
Date of revision:
Bounded rationality; Choice experiments;
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D9 - Microeconomics - - Intertemporal Choice
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-28 (All new papers)
- NEP-CBE-2006-07-28 (Cognitive & Behavioural Economics)
- NEP-DCM-2006-07-28 (Discrete Choice Models)
- NEP-EVO-2006-07-28 (Evolutionary Economics)
- NEP-EXP-2006-07-28 (Experimental Economics)
- NEP-MIC-2006-07-28 (Microeconomics)
- NEP-POL-2006-07-28 (Positive Political Economics)
- NEP-UPT-2006-07-28 (Utility Models & Prospect Theory)
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.:
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