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A simple model of two-stage choice

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  • HORAN, Sean

Abstract

I provide choice-theoretic foundations for a simple two-stage model, called transitive shortlist methods, where choices are made by sequentially by applying a pair of transitive preferences (or rationales) to eliminate inferior alternatives. Despite its simplicity, the model accommodates a wide range of choice phenomena including the status quo bias, framing, homophily, compromise, and limited willpower. I establish that the model can be succinctly characterized in terms of some well-documented context effects in choice. I also show that the underlying rationales are straightforward to determine from readily observable reversals in choice. Finally, I highlight the usefulness of these results in a variety of applications.

Suggested Citation

  • HORAN, Sean, 2016. "A simple model of two-stage choice," Cahiers de recherche 2016-01, Universite de Montreal, Departement de sciences economiques.
  • Handle: RePEc:mtl:montde:2016-01
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    File URL: http://hdl.handle.net/1866/13024
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    Citations

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    Cited by:

    1. Tugce Cuhadaroglu, 2015. "Choosing on Influence," Discussion Paper Series, School of Economics and Finance 201504, School of Economics and Finance, University of St Andrews.
    2. Kops, Christopher, 2022. "Cluster-shortlisted choice," Journal of Mathematical Economics, Elsevier, vol. 102(C).
    3. Ahumada, Alonso & Ülkü, Levent, 2018. "Luce rule with limited consideration," Mathematical Social Sciences, Elsevier, vol. 93(C), pages 52-56.
    4. Geng, Sen, 2022. "Limited consideration model with a trigger or a capacity," Journal of Mathematical Economics, Elsevier, vol. 101(C).
    5. David M. Ramsey, 2020. "A Game Theoretic Model of Choosing a Valuable Good via a Short List Heuristic," Mathematics, MDPI, vol. 8(2), pages 1-20, February.
    6. Guy Barokas & Burak Ünveren, 2022. "Impressionable Rational Choice: Revealed-Preference Theory with Framing Effects," Mathematics, MDPI, vol. 10(23), pages 1-19, November.
    7. Kashaev, Nail & Aguiar, Victor H., 2022. "A random attention and utility model," Journal of Economic Theory, Elsevier, vol. 204(C).
    8. Qin, Dan, 2021. "Exclusive shortlisting choice with reference," Economics Letters, Elsevier, vol. 198(C).
    9. Horan, Sean & Sprumont, Yves, 2022. "Two-stage majoritarian choice," Theoretical Economics, Econometric Society, vol. 17(2), May.
    10. David Freeman, 2013. "Revealed Preference Foundations of Expectations-Based Reference-Dependence," Discussion Papers dp13-10, Department of Economics, Simon Fraser University.
    11. Matsuki, Jun & Tadenuma, Koichi & 蓼沼, 宏一, 2013. "Choice via Grouping Procedures," CCES Discussion Paper Series 52, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    12. Geng, Sen & Özbay, Erkut Y., 2021. "Shortlisting procedure with a limited capacity," Journal of Mathematical Economics, Elsevier, vol. 94(C).
    13. Guy Barokas, 2020. "Identifying changing taste from demand data via golden eggs," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 54(1), pages 47-68, January.
    14. Juan Lleras & Yusufcan Masatlioglu & Daisuke Nakajima & Erkut Ozbay, 2021. "Path-Independent Consideration," Games, MDPI, vol. 12(1), pages 1-10, March.
    15. Gian Caspari & Manshu Khanna, 2021. "Non-Standard Choice in Matching Markets," Papers 2111.06815, arXiv.org.
    16. Özgür Kıbrıs & Yusufcan Masatlioglu & Elchin Suleymanov, 2023. "A theory of reference point formation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(1), pages 137-166, January.
    17. abhinash Borah & Raghvi Garg, 2020. "Torn between want and should: Self regulation and behavioral choices," Working Papers 29, Ashoka University, Department of Economics.
    18. Mario Vazquez Corte, 2020. "A Model of Choice with Minimal Compromise," Papers 2010.08771, arXiv.org, revised Oct 2020.
    19. Bleile, Jörg, 2016. "Limited Attention in Case-Based Belief Formation," Center for Mathematical Economics Working Papers 518, Center for Mathematical Economics, Bielefeld University.
    20. Bhavook Bhardwaj & Kriti Manocha, 2021. "Choice by Rejection," Papers 2108.07424, arXiv.org.
    21. Cuhadaroglu, Tugce, 2015. "Choosing on Influence," SIRE Discussion Papers 2015-59, Scottish Institute for Research in Economics (SIRE).
    22. Cuhadaroglu, Tugce, 2017. "Choosing on influence," Theoretical Economics, Econometric Society, vol. 12(2), May.

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    More about this item

    Keywords

    Shortlisting; axiomatization; revealed preference; identification;
    All these keywords.

    JEL classification:

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

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