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A Simple Model of Two-Stage Choice

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  • Sean HORAN

Abstract

I provide choice-theoretic foundations for a simple two-stage model, called transitive shortlist methods, where choices are made by sequentially 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

  • Sean HORAN, 2016. "A Simple Model of Two-Stage Choice," Cahiers de recherche 01-2016, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  • Handle: RePEc:mtl:montec:01-2016
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    References listed on IDEAS

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    Citations

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    as


    Cited by:

    1. Tugce Cuhadaroglu, 2015. "Choosing on Influence," Discussion Paper Series, Department of Economics 201504, Department of Economics, University of St. Andrews.
    2. repec:eee:matsoc:v:93:y:2018:i:c:p:52-56 is not listed on IDEAS
    3. David Freeman, 2013. "Revealed Preference Foundations of Expectations-Based Reference-Dependence," Discussion Papers dp13-10, Department of Economics, Simon Fraser University.
    4. Cuhadaroglu, Tugce, 2015. "Choosing on Influence," SIRE Discussion Papers 2015-59, Scottish Institute for Research in Economics (SIRE).
    5. Cuhadaroglu, Tugce, 2017. "Choosing on influence," Theoretical Economics, Econometric Society, vol. 12(2), May.

    More about this item

    Keywords

    shortlisting; axiomatization; revealed preference; identification;

    JEL classification:

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

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