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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
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    References listed on IDEAS

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    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.
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    Citations

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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.

    More about this item

    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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