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Prior-Free Optimality and Satisficing - A Common Framework and its Experimental Implementation -

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  • Werner Güth

    () (Max Planck Institute of Economics, Jena, Strategic Interaction Group)

Abstract

Similar to welfare economics where with(out) interpersonal comparisons one defines unique (set-valued) welfare (Pareto) optima, we present a framework for one-person decision making where with(out) a prior probability distribution individual optimality prescribes usually a unique (set of) choice(s). Satisfiable aspirations in the sense that there exists some choice guaranteeing them define a much larger choice set whose intersection with the set of prior-free optimal choices is never empty. We also review experimental procedures and results which incentivize aspiration formation and reject even prior-free optimality experimentally.

Suggested Citation

  • Werner Güth, 2008. "Prior-Free Optimality and Satisficing - A Common Framework and its Experimental Implementation -," Jena Economic Research Papers 2008-055, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2008-055
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    File URL: http://zs.thulb.uni-jena.de/receive/jportal_jparticle_00103336
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    Keywords

    Satisficing; bounded rationality; optimality;

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D10 - Microeconomics - - Household Behavior - - - General

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