Bayesian Contextual Choices under Imperfect Perception of Attributes

Junnan He ()
Additional contact information
Junnan He: ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique

SciencePo Working papers Main from HAL

Abstract: The classical rational choice theory proposes that preferences are context-independent, e.g. independent of irrelevant alternatives. Empirical choice data, however, display several contextual choice effects that seem inconsistent with rational preferences. We study a choice model with a fixed underlying utility function and explain contextual choices with a novel information friction: the agent's perception of the options is affected by an attribute-specific noise. Under this friction, the agent learns useful information when she sees more options. Therefore, the agent chooses contextually, exhibiting intransitivity, joint-separate evaluation reversal, attraction effect, compromise effect, similarity effect, and phantom decoy effect. Nonetheless, because the noise is attribute-specific and common across alternatives, the agent's choice is perfectly rational whenever an option clearly dominates others.

Keywords: Compromise effect; Context effect; Imperfect perception; Intransitive choices; Joint-separate evaluation reversal; Phantom decoy effect; Stable preferences. (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-dcm, nep-evo and nep-upt
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03878378
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://sciencespo.hal.science/hal-03878378/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-03878378

Access Statistics for this paper

More papers in SciencePo Working papers Main from HAL
Bibliographic data for series maintained by Contact - Sciences Po Departement of Economics ().