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The Foundations of Imperfect Decision Making

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  • Tyson, Chris

    (Stanford U)

Abstract

A theory of decision-making is proposed that speaks to Herbert Simon's methodological critique of economics without resorting to excessive reductionism. Formally, the new theory removes the Contraction axiom of conventional choice theory (which is itself reviewed in detail). In its interpretation, the theory reflects a conceit that decision makers may not fully perceive their preferences among alternatives, with perceived preference being assumed to possess different sets of properties. A utility-based representation of the postulated behavior is obtained, and is seen to be reminiscent of Simon's notion of "satisficing."

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  • Tyson, Chris, 2001. "The Foundations of Imperfect Decision Making," Research Papers 1714, Stanford University, Graduate School of Business.
  • Handle: RePEc:ecl:stabus:1714
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Todd Guilfoos & Andreas Duus Pape, 2016. "Predicting human cooperation in the Prisoner’s Dilemma using case-based decision theory," Theory and Decision, Springer, vol. 80(1), pages 1-32, January.
    2. Manzini, Paola & Mariotti, Marco & Tyson, Christopher J., 2016. "Partial knowledge restrictions on the two-stage threshold model of choice," Journal of Mathematical Economics, Elsevier, vol. 64(C), pages 41-47.
    3. repec:the:publsh:1769 is not listed on IDEAS
    4. Georgios, Gerasimou, 2013. "A Behavioural Model of Choice in the Presence of Decision Conflict," SIRE Discussion Papers 2013-25, Scottish Institute for Research in Economics (SIRE).
    5. Nicolas Houy, 2008. "Progressive knowledge revealed preferences and sequential rationalizability," Working Papers hal-00360546, HAL.
    6. repec:spr:grdene:v:23:y:2014:i:3:d:10.1007_s10726-013-9343-9 is not listed on IDEAS
    7. 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.
    8. Juan P. Aguilera & Levent Ülkü, 2017. "On the maximization of menu-dependent interval orders," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 48(2), pages 357-366, February.
    9. Salvador Barberà & Alejandro Neme, 2015. "Ordinal Relative Satisficing Behavior: Theory and Experiments," Working Papers 790, Barcelona Graduate School of Economics.
    10. Papi, Mauro, 2012. "Satisficing choice procedures," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 451-462.
    11. Hiroki Nishimura, 2014. "The Transitive Core: Inference of Welfare from Nontransitive Preference Relations," Working Papers 201419, University of California at Riverside, Department of Economics.
    12. Frick, Mira, 2016. "Monotone threshold representations," Theoretical Economics, Econometric Society, vol. 11(3), September.
    13. Bleile, Jörg, 2016. "Limited Attention in Case-Based Belief Formation," Center for Mathematical Economics Working Papers 518, Center for Mathematical Economics, Bielefeld University.
    14. Pivato, Marcus, 2013. "Multiutility representations for incomplete difference preorders," Mathematical Social Sciences, Elsevier, vol. 66(3), pages 196-220.
    15. 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.
    16. repec:kap:theord:v:83:y:2017:i:2:d:10.1007_s11238-017-9592-1 is not listed on IDEAS
    17. Valentino Dardanoni & Paola Manzini & Marco Mariotti & Christopher J. Tyson, 2017. "Inferring Cognitive Heterogeneity from Aggregate Choices," Discussion Paper Series, Department of Economics 201701, Department of Economics, University of St. Andrews, revised 25 May 2017.
    18. Sandorf, Erlend Dancke & Campbell, Danny, 2016. "Accommodating satisficing behavior in stated choice experiments," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235905, Agricultural and Applied Economics Association.
    19. Papi, Mauro, 2013. "Satisficing and maximizing consumers in a monopolistic screening model," Mathematical Social Sciences, Elsevier, vol. 66(3), pages 385-389.
    20. Spears Dean, 2011. "Intertemporal Bounded Rationality as Consideration Sets with Contraction Consistency," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 11(1), pages 1-16, June.
    21. Chambers, Christopher P. & Hayashi, Takashi, 2012. "Choice and individual welfare," Journal of Economic Theory, Elsevier, vol. 147(5), pages 1818-1849.
    22. Dinko Dimitrov & Saptarshi Mukherjee & Nozomu Muto, 2016. "‘Divide-and-choose’ in list-based decision problems," Theory and Decision, Springer, vol. 81(1), pages 17-31, June.
    23. Manzini, Paola & Mariotti, Marco & Tyson, Christopher J., 2011. "Manipulation of Choice Behavior," IZA Discussion Papers 5891, Institute for the Study of Labor (IZA).
    24. Manzini, Paola & Mariotti, Marco & Tyson, Christopher J, 2015. "Partial Knowledge Restrictions on theTwo-Stage Threshold Model of Choice," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-58, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    25. Manzini, Paola & Tyson, Christopher J. & Mariotti, Marco, 2013. "Two-stage threshold representations," Theoretical Economics, Econometric Society, vol. 8(3), September.

    More about this item

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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