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Choice by iterative search

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  • ,

    (Department of Economics, University of Michigan)

  • ,

    (Department of Economics, Otaru University of Commerce)

Abstract

When making choices, decision makers often either lack information about alternatives or lack the cognitive capacity to analyze every alternative. To capture these situations, we formulate a framework to study behavioral search by utilizing the idea of consideration sets. Consumers engage in a dynamic search process. At each stage, they consider only those options in the current consideration set. We provide behavioral postulates characterizing this model. We illustrate how one can identify both search paths and preferences.

Suggested Citation

  • , & ,, 2013. "Choice by iterative search," Theoretical Economics, Econometric Society, vol. 8(3), September.
    • Handle: RePEc:the:publsh:1014
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    References listed on IDEAS

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    More about this item

    Keywords

    Search; satisficing; bounded rationality; consideration set; reference-dependent choice; revealed preference;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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