A Salience Theory of Choice Errors
AbstractWe study a psychologically based foundation for choice errors. The decision maker applies a preference ranking after forming a ?consideration set?prior to choosing an alternative. Membership of the consideration set is determined both by the alternative speci?c salience and by the rationality of the agent (his general propensity to consider all alternatives). The model turns out to include a logit formulation as a special case. In general, it has a rich set of implications both for exogenous parameters and for a situation in which alternatives can a¤ect their own salience (salience games). Such implications are relevant to assess the link between ?revealed? preferences and ?true?preferences: for example, less rational agents may paradoxically express their preference through choice more truthfully than more rational agents.
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Bibliographic InfoPaper provided by Department of Economics, University of St. Andrews in its series Discussion Paper Series, Department of Economics with number 1003.
Date of creation: Jun 2010
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Other versions of this item:
- Manzini, Paola & Mariotti, Marco, 2010. "A Salience Theory of Choice Errors," SIRE Discussion Papers 2010-37, Scottish Institute for Research in Economics (SIRE).
- Manzini, Paola & Mariotti, Marco, 2010. "A Salience Theory of Choice Errors," IZA Discussion Papers 5006, Institute for the Study of Labor (IZA).
- D0 - Microeconomics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-26 (All new papers)
- NEP-DCM-2010-06-26 (Discrete Choice Models)
- NEP-EVO-2010-06-26 (Evolutionary Economics)
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- Paola Manzini & Marco Mariotti, 2007. "Sequentially Rationalizable Choice," American Economic Review, American Economic Association, vol. 97(5), pages 1824-1839, December.
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