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Cognitive Constraints, Contraction Consistency, and the Satisficing Criterion

A theory of decision making is proposed that offers an axiomatic basis for the notion of "satisficing" postulated by Herbert Simon. The theory relaxes the standard assumption that the decision maker always fully perceives his preferences among the available alternatives, requiring instead that his ability to perceive any given preference be decreasing with respect to the complexity of the choice problem at hand. When complexity is aligned with set inclusion, this exercise is shown to be equivalent to abandoning the contraction consistency axiom of classical choice theory.

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File URL: http://www.econ.qmul.ac.uk/papers/doc/wp614.pdf
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Paper provided by Queen Mary University of London, School of Economics and Finance in its series Working Papers with number 614.

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Date of creation: Oct 2007
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Handle: RePEc:qmw:qmwecw:wp614
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  21. James A. Mirrlees., 1987. "Economic Policy and Nonrational Behaviour," Economics Working Papers 8728, University of California at Berkeley.
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  23. José Apesteguía & Miguel A. Ballester, 2005. "Minimal Books Of Rationales," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 0501, Departamento de Economía - Universidad Pública de Navarra.
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  27. Paola Manzini & Marco Mariotti, 2004. "Rationalizing Boundedly Rational Choice," Microeconomics 0407005, EconWPA, revised 21 Jul 2005.
  28. Anand, Paul, 1993. "The Philosophy of Intransitive Preference," Economic Journal, Royal Economic Society, vol. 103(417), pages 337-46, March.
  29. Amartya K. Sen, 1971. "Choice Functions and Revealed Preference," Review of Economic Studies, Oxford University Press, vol. 38(3), pages 307-317.
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