Positively correlated choice

Guy Barokas

Mathematical Social Sciences, 2024, vol. 127, issue C, 62-71

Abstract: We provide an axiomatic foundation for a choice model with two periods between which preferences are updated, but the second period choices are positively correlated with past choices in a manner that is unrelated to the agent’s preferences. Specifically, in our model, the agent chooses alternative x over alternative y in contrast to his past choice if and only if the difference between the utility of x and that of y is higher than some fixed cost. While restrictive in its nature, this representation captures several related but distinctive phenomena: a taste for consistency, cognitive dissonance, the escalation of commitment, passive choice, and habit formation. We also provide a representation that allows for a more general form of cost and the revealed preference implications of our models. Finally, we connect our representation to the theories of imperfect discrimination.

Keywords: Bounded rationality; Cognitive dissonance; Revealed preference; Taste for consistency; Passive choice; Weak semiorders (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:127:y:2024:i:c:p:62-71

DOI: 10.1016/j.mathsocsci.2023.08.001

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