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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/

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

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References

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  1. Geoffroy de Clippel & Kfir Eliaz, 2009. "Reason-Based Choice: A Bargaining Rationale for the Attraction and Compromise Effects," Working Papers 2009-4, Brown University, Department of Economics.
  2. Michael Mandler, 2004. "Status quo maintenance reconsidered: changing or incomplete preferences?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 114(499), pages F518-F535, November.
  3. Yusufcan Masatlioglu & Daisuke Nakajima & Erkut Ozbay, 2009. "Revealed Attention," NajEcon Working Paper Reviews 814577000000000409, www.najecon.org.
  4. Jose Apesteguia & Miguel Angel Ballester, 2010. "A measure of rationality and welfare," Economics Working Papers 1220, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2011.
  5. Michael Mandler & Paola Manzini & Marco Mariotti, 2008. "A Million Answers to Twenty Questions: Choosing by Checklist," Working Papers 622, Queen Mary, University of London, School of Economics and Finance.
  6. Mariotti, Marco & Manzini, Paola, 2012. "Choice by lexicographic semiorders," Theoretical Economics, Econometric Society, Econometric Society, vol. 7(1), January.
  7. 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.
  8. Jose Apesteguia & Miguel A. Ballester, 2007. "A theory of reference-dependent behavior," Economics Working Papers 1056, Department of Economics and Business, Universitat Pompeu Fabra.
  9. Walter Bossert & Yves Sprumont & Kotaro Suzumura, 2005. "Maximal-Element Rationalizability," Theory and Decision, Springer, Springer, vol. 58(4), pages 325-350, 06.
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  12. BOSSERT, Walter & SPRUMONT, Yves, 2001. "Non-Deteriorating Choice," Cahiers de recherche, Universite de Montreal, Departement de sciences economiques 2001-01, Universite de Montreal, Departement de sciences economiques.
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  14. Syngjoo Choi & Shachar Kariv & Wieland Mueller & Dan Silverman, 2011. "Who Is (More) Rational?," Vienna Economics Papers, University of Vienna, Department of Economics 1105, University of Vienna, Department of Economics.
  15. Attila Ambrus & Kareen Rozen, 2012. "Rationalizing Choice with Multi-Self Models," Working Papers, Duke University, Department of Economics 12-11, Duke University, Department of Economics.
  16. Robin M. Hogarth & Natalia Karelaia, 2005. "Simple Models for Multiattribute Choice with Many Alternatives: When It Does and Does Not Pay to Face Trade-offs with Binary Attributes," Management Science, INFORMS, INFORMS, vol. 51(12), pages 1860-1872, December.
  17. Christopher J. Tyson, 2012. "Behavioral Implications of Shortlisting Procedures," Working Papers 697, Queen Mary, University of London, School of Economics and Finance.
  18. Daniel Kahneman & Jack L. Knetsch & Richard H. Thaler, 1991. "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 193-206, Winter.
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  20. García-Sanz, María D. & Alcantud, José Carlos R., 2010. "Rational choice by two sequential criteria," MPRA Paper 21487, University Library of Munich, Germany.
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  22. Raphaël Giraud, 2012. "Money matters: an axiomatic theory of the endowment effect," Economic Theory, Springer, Springer, vol. 50(2), pages 303-339, June.
  23. Paola Manzini & Marco Mariotti, 2012. "Categorize Then Choose: Boundedly Rational Choice And Welfare," Journal of the European Economic Association, European Economic Association, European Economic Association, vol. 10(5), pages 1141-1165, October.
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  25. 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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Citations

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Cited by:
  1. Rohan Dutta & Sean Horan, 2013. "Inferring Rationales from Choice : Identification for Rational Shortlist Methods," Cahiers de recherche, Centre interuniversitaire de recherche en économie quantitative, CIREQ 09-2013, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  2. Georgios Gerasimou, 2013. "A Behavioural Model of Choice in the Presence of Decision Conflict," Discussion Paper Series, Department of Economics 201302, Department of Economics, University of St. Andrews.
  3. Nicolas Houy, 2008. "Progressive knowledge revealed preferences and sequential rationalizability," Working Papers hal-00360546, HAL.
  4. Apesteguia, Jose & Ballester, Miguel A., 2010. "The Computational Complexity of Rationalizing Behavior," Journal of Mathematical Economics, Elsevier, vol. 46(3), pages 356-363, May.
  5. Demuynck, Thomas, 2011. "The computational complexity of rationalizing boundedly rational choice behavior," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 425-433.
  6. 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.

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