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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."

Suggested Citation

  • 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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    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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