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Context-dependent choice as explained by foraging theory

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  • Li, Shengwu
  • Yu, Ning Neil

Abstract

An agent makes consumption choices in multiple periods. Choice objects vary in type and quality; objects of the same type are inter-temporal substitutes. The current choice set is informative about the distribution over future choice sets. Thus, the presence of unchosen alternatives may rationally alter the agent's choice. Under some simple assumptions, the optimal policy exhibits context-dependent choice behavior, such as the decoy effect and choice overload.

Suggested Citation

  • Li, Shengwu & Yu, Ning Neil, 2018. "Context-dependent choice as explained by foraging theory," Journal of Economic Theory, Elsevier, vol. 175(C), pages 159-177.
  • Handle: RePEc:eee:jetheo:v:175:y:2018:i:c:p:159-177
    DOI: 10.1016/j.jet.2018.01.014
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    References listed on IDEAS

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    More about this item

    Keywords

    Decoy effect; Choice overload; Foraging theory; Consumer choice; Dynamic stochastic choice model; Monotone comparative statics;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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