Cognitive Constraints, Contraction Consistency, and the Satisficing Criterion
AbstractA theory of decision making is proposed that offers an axiomatic basis for the notion of "satisficing" postulated by Herbert Simon. The theory relaxes the standard assumption that the decision maker always fully perceives his preferences among the available alternatives, requiring instead that his ability to perceive any given preference be decreasing with respect to the complexity of the choice problem at hand. When complexity is aligned with set inclusion, this exercise is shown to be equivalent to abandoning the contraction consistency axiom of classical choice theory.
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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 614.
Date of creation: Oct 2007
Date of revision:
Choice function; Perception; Revealed preference; Threshold;
Find related papers by JEL classification:
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-27 (All new papers)
- NEP-CBE-2007-10-27 (Cognitive & Behavioural Economics)
- NEP-DCM-2007-10-27 (Discrete Choice Models)
- NEP-HPE-2007-10-27 (History & Philosophy of Economics)
- NEP-UPT-2007-10-27 (Utility Models & Prospect Theory)
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