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Reason-Based Rationalization

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  • Franz Dietrich
  • Christian List

Abstract

"Reason-based rationalizations" explain an agent's choices by specifying which properties of the options or choice context he/she cares about (the "motivationally salient properties") and how he/she cares about these properties the "fundamental preference relation"). We characterize the choice-behavioural implications of reason-based rationalizability and identify two kinds of context-dependent motivation in a reason-based agent: he/she may (i) care about different properties in different contexts and (ii) care not only about properties of the options, but also about properties relating to the context. Reason-based rationalizations can explain non-classical choice behaviour, including boundedly rational and sophisticated rational behaviour, and predict choices in unobserved contexts, an issue neglected in standard choice theory.

Suggested Citation

  • Franz Dietrich & Christian List, 2014. "Reason-Based Rationalization," STICERD - Theoretical Economics Paper Series 565, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  • Handle: RePEc:cep:stitep:565
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    References listed on IDEAS

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    1. B. Douglas Bernheim & Antonio Rangel, 2009. "Beyond Revealed Preference: Choice-Theoretic Foundations for Behavioral Welfare Economics," The Quarterly Journal of Economics, Oxford University Press, vol. 124(1), pages 51-104.
    2. Suzumura, Kotaro & Xu, Yongsheng, 2001. "Characterizations of Consequentialism and Nonconsequentialism," Journal of Economic Theory, Elsevier, vol. 101(2), pages 423-436, December.
    3. Paola Manzini & Marco Mariotti, 2007. "Sequentially Rationalizable Choice," American Economic Review, American Economic Association, vol. 97(5), pages 1824-1839, December.
    4. Dietrich, Franz, 2012. "Modelling change in individual characteristics: An axiomatic framework," Games and Economic Behavior, Elsevier, vol. 76(2), pages 471-494.
    5. 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.
    6. Dietrich, Franz & List, Christian, 2016. "Mentalism Versus Behaviourism In Economics: A Philosophy-Of-Science Perspective," Economics and Philosophy, Cambridge University Press, vol. 32(02), pages 249-281, July.
    7. Gil Kalai & Ariel Rubinstein & Ran Spiegler, 2002. "Rationalizing Choice Functions By Multiple Rationales," Econometrica, Econometric Society, vol. 70(6), pages 2481-2488, November.
    8. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    9. Ariel Rubinstein, 2006. "Lecture Notes in Microeconomic Theory," Online economics textbooks, SUNY-Oswego, Department of Economics, number gradmicro1.
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    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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