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Bounded Rationality and Limited Datasets


  • Geoffroy de Clippel
  • Kareen Rozen


Theories of bounded rationality are typically characterized over an exhaustive data set. How does one tell whether observed choices are consistent with a theory if the data is incomplete? How can out-of-sample predictions be made? What can be identified about preferences? This paper aims to operationalize some leading bounded rationality theories when the available data is limited, as is the case in most practical settings. We also point out that the recent bounded rationality literature has overlooked a methodological pitfall that can lead to 'false positives' and 'empty' out-of-sample predictions when testing choice theories with limited data.
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  • Geoffroy de Clippel & Kareen Rozen, 2012. "Bounded Rationality and Limited Datasets," NajEcon Working Paper Reviews 786969000000000487,
  • Handle: RePEc:cla:najeco:786969000000000487

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    References listed on IDEAS

    1. Paola Manzini & Marco Mariotti, 2012. "Categorize Then Choose: Boundedly Rational Choice And Welfare," Journal of the European Economic Association, European Economic Association, vol. 10(5), pages 1141-1165, October.
    2. Christopher Tyson, 2013. "Behavioral implications of shortlisting procedures," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(4), pages 941-963, October.
    3. Paola Manzini & Marco Mariotti, 2007. "Sequentially Rationalizable Choice," American Economic Review, American Economic Association, vol. 97(5), pages 1824-1839, December.
    4. Yusufcan Masatlioglu & Daisuke Nakajima & Erkut Y. Ozbay, 2012. "Revealed Attention," American Economic Review, American Economic Association, vol. 102(5), pages 2183-2205, August.
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    Cited by:

    1. Victor Aguiar & Roberto Serrano, 2015. "Slutsky Matrix Norms and Revealed Preference Tests of Consumer Behaviour," Working Papers 2015-1, Brown University, Department of Economics.
    2. Elias Bouacida & Daniel Martin, 2017. "Predictive Power in Behavioral Welfare Economics," PSE Working Papers halshs-01489252, HAL.
    3. Christopher Tyson, 2015. "Satisficing behavior with a secondary criterion," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 44(3), pages 639-661, March.
    4. repec:spr:sochwe:v:50:y:2018:i:1:d:10.1007_s00355-017-1077-1 is not listed on IDEAS
    5. David Freeman, 2016. "Revealing Naïveté and Sophistication from Procrastination and Preproperation," Discussion Papers dp16-11, Department of Economics, Simon Fraser University.
    6. Matias D. Cattaneo & Xinwei Ma & Yusufcan Masatlioglu & Elchin Suleymanov, 2017. "A Random Attention Model," Papers 1712.03448,
    7. Yuta Inoue & Koji Shirai, 2016. "Limited consideration and limited data," Discussion Paper Series 149, School of Economics, Kwansei Gakuin University, revised Oct 2016.
    8. Jean-Michel Benkert & Nick Netzer, 2015. "Informational Requirements of Nudging," CESifo Working Paper Series 5327, CESifo Group Munich.
    9. Rohan Dutta & Sean Horan, 2015. "Inferring Rationales from Choice: Identification for Rational Shortlist Methods," American Economic Journal: Microeconomics, American Economic Association, vol. 7(4), pages 179-201, November.
    10. John Quah & Hiroki Nishimura & Efe A. Ok, 2013. "A Unified Approach to Revealed Preference Theory: The Case of Rational Choice," Economics Series Working Papers 686, University of Oxford, Department of Economics.

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    JEL classification:

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

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