A model of decision making in an ecologically realistic environment: Relative comparison and the Independence of Irrelevant Alternatives

Avi Waksberg (), Andrew Smith and Martin Burd

Journal of Bioeconomics, 2012, vol. 14, issue 3, 197-215

Abstract: Models of behavior in a variety of areas often assume that decision-makers will adhere to the axioms of economic rationality. This requires that outcomes can be assigned objective values by stable evaluation frameworks. Yet both human and animal behavior is often not economically rational. Instead relative comparison of options is often used to assess value. We are interested in conditions that might lead natural selection to favor relative comparison of options over behavior that is consistent with the axioms of rationality. We compare an economically rational strategy with a relative comparison strategy (trade-off contrast). We model these strategies in a simple environment where decisions are multi-period; there is stochastic fluctuation in the choices available at any given time; and uncertainty about what choices will be available in the future. We investigate five levels of interaction between the attributes of the options that range from perfect complementarity to perfect substitutability. Our results show that, for some of the parameter space, a non-rational strategy achieved higher fitness than an economically rational strategy and that these differences were large enough to be biologically significant. Copyright Springer Science+Business Media, LLC. 2012

Keywords: Rationality; Independence of Irrational Alternatives; Complementary resources; Prospect theory; Feeding behavior; Choice theory; A1; B4; D8 (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1007/s10818-011-9125-x

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