Aspiration-based choice

Begum Guney, Michael Richter and Matan Tsur

Journal of Economic Theory, 2018, vol. 176, issue C, 935-956

Abstract: Numerous studies and experiments suggest that aspirations for desired but perhaps unavailable alternatives influence decisions. A common finding is that an unavailable aspiration steers agents to choose similar available alternatives. We propose and axiomatically characterize a choice theory consistent with this aspirational effect. Similarity is modeled using a subjective metric derived from choice data. This model offers implications for consumer welfare and its distribution between rich and poor when firms compete for aspirational agents, and a novel rationale for sales.

Keywords: Choice; Similarity; Aspirations; Consumer welfare (search for similar items in EconPapers)
JEL-codes: D11 D21 D90 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:176:y:2018:i:c:p:935-956

DOI: 10.1016/j.jet.2018.05.003

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