Pairwise normalization: A neuroeconomic theory of multi-attribute choice

Peter Landry and Ryan Webb

Journal of Economic Theory, 2021, vol. 193, issue C

Abstract: We present a theory of multi-attribute choice founded in the neuroscience of perception. Valuation is formed through a series of pairwise, attribute-level comparisons implemented by (divisive) normalization — a form of relative value coding observed across sensory modalities and in species ranging from honeybees to humans. Such “pairwise normalization” captures a broad range of behavioral regularities in multi-attribute choice, including the compromise and asymmetric dominance effects, the diversification bias in allocation decisions, and majority-rule preference cycles.

Keywords: Neuroeconomics; Consumer theory; Multi-attribute choice; Decoy effects (search for similar items in EconPapers)
JEL-codes: D01 D11 D87 D91 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:193:y:2021:i:c:s0022053121000387

DOI: 10.1016/j.jet.2021.105221

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