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Rationality with preference discovery costs

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  • Matthew S. Wilson

    (Truman State University)

Abstract

Economic theory assumes that preferences are rational. However, experiments have found small violations of transitivity. This paper develops a model of rationality with preference discovery costs. Introspection is costly. Thus, agents may find it optimal to use less than full effort, even though this raises the risk of making a poor choice. This model could potentially explain the intransitivities observed in the data while retaining rationality and optimization.

Suggested Citation

  • Matthew S. Wilson, 2018. "Rationality with preference discovery costs," Theory and Decision, Springer, vol. 85(2), pages 233-251, August.
    • Handle: RePEc:kap:theord:v:85:y:2018:i:2:d:10.1007_s11238-017-9628-6
    DOI: 10.1007/s11238-017-9628-6
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    References listed on IDEAS

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    Cited by:

    1. Marek Kapera, 2022. "Learning own preferences through consumption," KAE Working Papers 2022-074, Warsaw School of Economics, Collegium of Economic Analysis.

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