Order-k rationality

Salvador Barberà (), Geoffroy de Clippel, Alejandro Neme () and Kareen Rozen ()
Additional contact information
Salvador Barberà: Barcelona GSE and Universitat Autònoma de Barcelona
Alejandro Neme: Universidad Nacional de San Luis and CONICET
Kareen Rozen: Brown University

Economic Theory, 2022, vol. 73, issue 4, No 11, 1135-1153

Abstract: Abstract A decision maker (DM) may not perfectly maximize her preference over the feasible set. She may feel it is good enough to maximize her preference over a sufficiently large consideration set; or just require that her choice is sufficiently well-ranked (e.g., in the top quintile of options); or even endogenously determine a threshold for what is good enough, based on an initial sampling of the options. Heuristics such as these are all encompassed by a common theory of order-k rationality, which relaxes perfect optimization by only requiring choices from a set S to fall within the set’s top k(S) elements according to the DM’s preference ordering. Heuristics aside, this departure from rationality offers a natural way, in the classic ‘as if’ tradition, to gradually accommodate more choice patterns as k increases. We characterize the empirical content of order-k rationality (and related theories), and provide a tractable testing method which is comparable to the method of checking SARP.

Keywords: Order-k rationality; Choice heuristics; Satisficing; Limited attention; D010 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s00199-021-01350-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Order-k Rationality (2020)
Working Paper: Order-k Rationality (2019)
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:spr:joecth:v:73:y:2022:i:4:d:10.1007_s00199-021-01350-z

Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/199/PS2

DOI: 10.1007/s00199-021-01350-z

Access Statistics for this article

Economic Theory is currently edited by Nichoals Yanneils

More articles in Economic Theory from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().