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Aspiration-based choice

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  • Guney, Begum
  • Richter, Michael
  • Tsur, Matan

Abstract

Numerous studies and experiments suggest that aspirations for desired but perhaps unavailable alternatives influence decisions. A common finding is that an unavailable aspiration steers agents to choose similar available alternatives. We propose and axiomatically characterize a choice theory consistent with this aspirational effect. Similarity is modeled using a subjective metric derived from choice data. This model offers implications for consumer welfare and its distribution between rich and poor when firms compete for aspirational agents, and a novel rationale for sales.

Suggested Citation

  • Guney, Begum & Richter, Michael & Tsur, Matan, 2018. "Aspiration-based choice," Journal of Economic Theory, Elsevier, vol. 176(C), pages 935-956.
  • Handle: RePEc:eee:jetheo:v:176:y:2018:i:c:p:935-956
    DOI: 10.1016/j.jet.2018.05.003
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    Cited by:

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    3. Stefan Sperlich & Jose-Ramon Uriarte, 2019. "The economics of minority language use: theory and empirical evidence for a language game model," Papers 1908.11604, arXiv.org.

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    More about this item

    Keywords

    Choice; Similarity; Aspirations; Consumer welfare;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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