Monotone threshold representations

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,: Cowles Foundation for Research in Economics, Yale University

Theoretical Economics, 2016, vol. 11, issue 3

Abstract: Motivated by the literature on ``choice overload'', we study a boundedly rational agent whose choice behavior admits a \textit{monotone threshold representation}: There is an underlying rational benchmark, corresponding to maximization of a utility function $v$, from which the agent's choices depart in a menu-dependent manner. The severity of the departure is quantified by a threshold map $\delta$, which is monotone with respect to set inclusion. We derive an axiomatic characterization of the model, extending familiar characterizations of rational choice. We classify monotone threshold representations as a special case of Simon's theory of ``satisficing'', but as strictly more general than both Tyson's (2008) ``expansive satisficing'' model as well as Fishburn (1975) and Luce's (1956) model of choice behavior generated by a semiorder. We axiomatically characterize the difference, providing novel foundations for these models.

Keywords: Bounded rationality; threshold representations; satisficing; choice; revealed preference (search for similar items in EconPapers)
JEL-codes: D01 D11 D80 D81 (search for similar items in EconPapers)
Date: 2016-09-13
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Citations: View citations in EconPapers (17)

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