Adaptive stochastic search

Victor Aguiar and Mert Kimya

Journal of Mathematical Economics, 2019, vol. 81, issue C, 74-83

Abstract: We characterize Simon’s (1955) search and satisficing model with an adaptive threshold and random search (SM-AT). The decision maker (DM) consistent with the SM-AT is endowed with a utility function, a random search distribution, and a deterministic but menu-dependent threshold. On any given trial, the DM searches the menu and stops whenever she finds an item with a utility level that is above the threshold. This simple choice procedure accommodates the well-known compromise and attraction effects. The SM-AT is more general than the random utility model and allows for systematic departures from regularity. Its characterization lets us differentiate adaptive satisficing behavior from random preference maximization in a (limited) standard stochastic choice data set.

Keywords: Search; Satisficing; Decision theory; Rationality; Random choice; Bounded rationality (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:81:y:2019:i:c:p:74-83

DOI: 10.1016/j.jmateco.2019.01.003

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