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Adaptive stochastic search

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  • Aguiar, Victor H.
  • Kimya, Mert

Abstract

We characterize Simon’s (1955) search and satisficing model with an adaptive threshold and random search (SM-AT). The decision maker (DM) consistent with the SM-AT is endowed with a utility function, a random search distribution, and a deterministic but menu-dependent threshold. On any given trial, the DM searches the menu and stops whenever she finds an item with a utility level that is above the threshold. This simple choice procedure accommodates the well-known compromise and attraction effects. The SM-AT is more general than the random utility model and allows for systematic departures from regularity. Its characterization lets us differentiate adaptive satisficing behavior from random preference maximization in a (limited) standard stochastic choice data set.

Suggested Citation

  • Aguiar, Victor H. & Kimya, Mert, 2019. "Adaptive stochastic search," Journal of Mathematical Economics, Elsevier, vol. 81(C), pages 74-83.
    • Handle: RePEc:eee:mateco:v:81:y:2019:i:c:p:74-83
    DOI: 10.1016/j.jmateco.2019.01.003
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    References listed on IDEAS

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    4. Arkarup Basu Mallik & Mihir Bhattacharya & Anuj Bhowmik, 2024. "Attributes and Limited Attention," Working Papers 120, Ashoka University, Department of Economics.
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    6. Li, Boyao, 2023. "Random utility models with status quo bias," Journal of Mathematical Economics, Elsevier, vol. 105(C).

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