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Choice by sequential procedures

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  • Jose Apesteguia

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  • Miguel A. Ballester

Abstract

We propose a rule of decision-making, the sequential procedure guided by routes, and show that three influential boundedly rational choice models can be equivalently understood as special cases of this rule. In addition, the sequential procedure guided by routes is instrumental in showing that the three models are intimately related. We show that choice with a status-quo bias is a refinement of rationalizability by game trees, which, in turn, is also a refinement of sequential rationalizability. Thus, we provide a sharp taxonomy of these choice models, and show that they all can be understood as choice by sequential procedures.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1309.

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Date of creation: Feb 2012
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Handle: RePEc:upf:upfgen:1309

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Web page: http://www.econ.upf.edu/

Related research

Keywords: Individual rationality; Bounded rationality; Behavioral economics.;

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References

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  1. Syngjoo Choi & Shachar Kariv & Wieland M?ller & Dan Silverman, 2014. "Who Is (More) Rational?," American Economic Review, American Economic Association, vol. 104(6), pages 1518-50, June.
  2. García-Sanz, María D. & Alcantud, José Carlos R., 2010. "Rational choice by two sequential criteria," MPRA Paper 21487, University Library of Munich, Germany.
  3. Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, MIT Press, vol. 121(4), pages 1133-1165, November.
  4. José Apesteguía & Miguel A. Ballester, 2004. "A Theory Of Reference-Dependent Beavior," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 0402, Departamento de Economía - Universidad Pública de Navarra.
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  13. Jose Apesteguia & Miguel Angel Ballester, 2010. "A Measure of Rationality and Welfare," Working Papers 467, Barcelona Graduate School of Economics.
  14. Mark Dean & Daniel Martin, 2011. "Testing for Rationality with Consumption Data: Demographics and Heterogeneity," Working Papers 2011-11, Brown University, Department of Economics.
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  16. Ehlers, Lars & Sprumont, Yves, 2008. "Weakened WARP and top-cycle choice rules," Journal of Mathematical Economics, Elsevier, vol. 44(1), pages 87-94, January.
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  18. Manzini, Paola & Mariotti, Marco, 2009. "Choice by Lexicographic Semiorders," IZA Discussion Papers 4046, Institute for the Study of Labor (IZA).
  19. Masatlioglu, Yusufcan & Ok, Efe A., 2005. "Rational choice with status quo bias," Journal of Economic Theory, Elsevier, vol. 121(1), pages 1-29, March.
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  21. Christopher Tyson, 2013. "Behavioral implications of shortlisting procedures," Social Choice and Welfare, Springer, vol. 41(4), pages 941-963, October.
  22. Raphaël Giraud, 2012. "Money matters: an axiomatic theory of the endowment effect," Economic Theory, Springer, vol. 50(2), pages 303-339, June.
  23. Attila Ambrus & Kareen Rozen, 2012. "Rationalizing Choice with Multi-Self Models," Working Papers 12-11, Duke University, Department of Economics.
  24. Yusufcan Masatlioglu & Daisuke Nakajima & Erkut Ozbay, 2009. "Revealed Attention," NajEcon Working Paper Reviews 814577000000000409, www.najecon.org.
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Citations

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Cited by:
  1. Demuynck, Thomas, 2011. "The computational complexity of rationalizing boundedly rational choice behavior," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 425-433.
  2. Ludovic Renou & Karl H. Schlag, 2009. "From Ordients to Optimization: Substitution Effects without Differentiability," Discussion Papers in Economics 09/6, Department of Economics, University of Leicester.
  3. Apesteguia, Jose & Ballester, Miguel A., 2010. "The Computational Complexity of Rationalizing Behavior," Journal of Mathematical Economics, Elsevier, vol. 46(3), pages 356-363, May.
  4. Georgios, Gerasimou, 2013. "A Behavioural Model of Choice in the Presence of Decision Conflict," SIRE Discussion Papers 2013-25, Scottish Institute for Research in Economics (SIRE).
  5. Nicolas Houy, 2008. "Progressive knowledge revealed preferences and sequential rationalizability," Working Papers hal-00360546, HAL.
  6. Rohan Dutta & Sean Horan, 2013. "Inferring Rationales from Choice : Identification for Rational Shortlist Methods," Cahiers de recherche 09-2013, Centre interuniversitaire de recherche en économie quantitative, CIREQ.

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