Reason-based choice: a bargaining rationale for the attraction and compromise effects
Among the most important and robust violations of rationality are the attraction and the compromise effects. The compromise effect refers to the tendency of individuals to choose an intermediate option in a choice set, while the attraction effect refers to the tendency to choose an option that dominates some other options in the choice set. This paper argues that both effects may result from an individual's attempt to overcome the difficulty of making a choice in the absence of a single criterion for ranking the options. Moreover, we propose to view the resolution of this choice problem as a cooperative solution to an intra-personal bargaining problem among different selves of an individual, where each self represents a different criterion for choosing. We first identify a set of properties that characterize those choice correspondences that coincide with our bargaining solution, for some pair of preference relations. Second, we provide a revealed-preference foundation to our bargaining solution and characterize the extent to which these two preference relations can be uniquely identified. Alternatively, our analysis may be reinterpreted as a study of (inter-personal) bilateral bargaining over a finite set of options. In that case, our results provide a new characterization, as well as testable implications, of an ordinal bargaining solution that has been previously discussed in the literature under the various names of fallback bargaining, unanimity compromise, Rawlsian arbitration rule and Kant-Rawls social compromise.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kfir Eliaz & Michael Richter & Ariel Rubinstein, 2011. "Choosing the two finalists," Economic Theory, Springer, vol. 46(2), pages 211-219, February.
- Chambers, Christopher P. & Echenique, Federico, 2008.
"The core matchings of markets with transfers,"
1298, California Institute of Technology, Division of the Humanities and Social Sciences.
- Özgür Kıbrıs & Murat Sertel, 2007. "Bargaining over a finite set of alternatives," Social Choice and Welfare, Springer, vol. 28(3), pages 421-437, April.
- Attila Ambrus & Kareen Rozen, 2008.
"Rationalizing Choice with Multi-Self Models,"
Cowles Foundation Discussion Papers
1670, Cowles Foundation for Research in Economics, Yale University, revised May 2012.
- Michele Lombardi, 2007.
"Reason-Based Choice Correspondences,"
607, Queen Mary University of London, School of Economics and Finance.
- Pierre-André Chiappori & Olivier Donni, 2006.
"Learning from a Piece of Pie: the Empirical Content of Nash Bargaining,"
Cahiers de recherche
- Chiappori, Pierre-André & Donni, Olivier, 2006. "Learning from a Piece of Pie: The Empirical Content of Nash Bargaining," IZA Discussion Papers 2128, Institute for the Study of Labor (IZA).
- Pierre-André Chiappori & Olivier Donni, 2005. "Learning From a Piece of Pie: The Empirical Content of Nash Bargaining," THEMA Working Papers 2006-07, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Kfir Eliaz & Ran Spiegler, 2004.
"Contracting with Diversely Naïve Agents,"
122247000000000530, UCLA Department of Economics.
- Gil Kalai & Ariel Rubinstein & Ran Spiegler, 2001.
"Rationalizing Choice Functions by Multiple Rationales,"
Discussion Paper Series
dp278, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
- Gil Kalai & Ariel Rubinstein & Ran Spiegler, 2002. "Rationalizing Choice Functions By Multiple Rationales," Econometrica, Econometric Society, vol. 70(6), pages 2481-2488, November.
- Gil Kalai & Ariel Rubenstein & Ran Spiegler, 2001. "Rationalizing Choice Functions by Multiple Rationales," Economics Working Papers 0010, Institute for Advanced Study, School of Social Science.
- Yusufcan Masatlioglu & Daisuke Nakajima & Erkut Ozbay, 2009.
NajEcon Working Paper Reviews
- Nejat Anbarci, 1993. "Noncooperative Foundations of the Area Monotonic Solution," The Quarterly Journal of Economics, Oxford University Press, vol. 108(1), pages 245-258.
- Green, Jerry & Hojman, Daniel, 2007. "Choice, Rationality and Welfare Measurement," Working Paper Series rwp07-054, Harvard University, John F. Kennedy School of Government.
- 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.
When requesting a correction, please mention this item's handle: RePEc:the:publsh:798. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Martin J. Osborne)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.