# Monotone threshold representations

## Author

Listed:
• Frick, Mira

() (Cowles Foundation for Research in Economics, Yale University)

## Abstract

Motivated by the literature on choice overload'', we study a boundedly rational agent whose choice behavior admits a \textit{monotone threshold representation}: There is an underlying rational benchmark, corresponding to maximization of a utility function $v$, from which the agent's choices depart in a menu-dependent manner. The severity of the departure is quantified by a threshold map $\delta$, which is monotone with respect to set inclusion. We derive an axiomatic characterization of the model, extending familiar characterizations of rational choice. We classify monotone threshold representations as a special case of Simon's theory of satisficing'', but as strictly more general than both Tyson's (2008) expansive satisficing'' model as well as Fishburn (1975) and Luce's (1956) model of choice behavior generated by a semiorder. We axiomatically characterize the difference, providing novel foundations for these models.

## Suggested Citation

• Frick, Mira, 2016. "Monotone threshold representations," Theoretical Economics, Econometric Society, vol. 11(3), September.
• Handle: RePEc:the:publsh:1547
as

File URL: http://econtheory.org/ojs/index.php/te/article/viewFile/20160757/16163/469

## References listed on IDEAS

as
1. Mandler, Michael & Manzini, Paola & Mariotti, Marco, 2012. "A million answers to twenty questions: Choosing by checklist," Journal of Economic Theory, Elsevier, vol. 147(1), pages 71-92.
2. Ellis, Andrew, 2018. "Foundations for optimal inattention," Journal of Economic Theory, Elsevier, vol. 173(C), pages 56-94.
3. Tyson, Christopher J., 2008. "Cognitive constraints, contraction consistency, and the satisficing criterion," Journal of Economic Theory, Elsevier, vol. 138(1), pages 51-70, January.
4. Masatlioglu, Yusufcan & Nakajima, Daisuke, 2013. "Choice by iterative search," Theoretical Economics, Econometric Society, vol. 8(3), September.
5. Ortoleva, Pietro, 2013. "The price of flexibility: Towards a theory of Thinking Aversion," Journal of Economic Theory, Elsevier, vol. 148(3), pages 903-934.
6. Amartya Sen, 1969. "Quasi-Transitivity, Rational Choice and Collective Decisions," Review of Economic Studies, Oxford University Press, vol. 36(3), pages 381-393.
7. Yusufcan Masatlioglu & Daisuke Nakajima & Erkut Y. Ozbay, 2012. "Revealed Attention," American Economic Review, American Economic Association, vol. 102(5), pages 2183-2205, August.
8. Malhotra, Naresh K, 1982. " Information Load and Consumer Decision Making," Journal of Consumer Research, Oxford University Press, vol. 8(4), pages 419-430, March.
9. Caplin, Andrew & Dean, Mark, 2011. "Search, choice, and revealed preference," Theoretical Economics, Econometric Society, vol. 6(1), January.
10. Efe A. Ok & Pietro Ortoleva & Gil Riella, 2015. "Revealed (P)Reference Theory," American Economic Review, American Economic Association, vol. 105(1), pages 299-321, January.
11. Huber, Joel & Payne, John W & Puto, Christopher, 1982. " Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis," Journal of Consumer Research, Oxford University Press, vol. 9(1), pages 90-98, June.
Full references (including those not matched with items on IDEAS)

## Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:

1. Deb, Joyee & Zhou, Jidong, 2018. "Reference Dependence and Choice Overload," MPRA Paper 86261, University Library of Munich, Germany.
2. Elias Bouacida, 2019. "Eliciting Choice Correspondences A General Method and an Experimental Implementation," PSE Working Papers halshs-01998001, HAL.
3. repec:eee:mateco:v:81:y:2019:i:c:p:74-83 is not listed on IDEAS
4. repec:eee:eecrev:v:101:y:2018:i:c:p:330-353 is not listed on IDEAS
5. repec:spr:etbull:v:6:y:2018:i:1:d:10.1007_s40505-017-0126-3 is not listed on IDEAS
6. D. Pennesi, 2016. "When perfectionism becomes willpower," Working Papers wp1050, Dipartimento Scienze Economiche, Universita' di Bologna.

### Keywords

Bounded rationality; threshold representations; satisficing; choice; revealed preference;

### JEL classification:

• D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
• D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
• D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
• D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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