Choice with Endogenous Categorization

Andrew Ellis and Yusufcan Masatlioglu

Papers from arXiv.org

Abstract: We propose and axiomatize the categorical thinking model (CTM) in which the framing of the decision problem affects how agents categorize alternatives, that in turn affects their evaluation of it. Prominent models of salience, status quo bias, loss-aversion, inequality aversion, and present bias all fit under the umbrella of CTM. This suggests categorization is an underlying mechanism of key departures from the neoclassical model of choice. We specialize CTM to provide a behavioral foundation for the salient thinking model of Bordalo et al. (2013) that highlights its strong predictions and distinctions from other models.

Date: 2020-05, Revised 2021-02
New Economics Papers: this item is included in nep-evo, nep-hme and nep-mic
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Citations: View citations in EconPapers (2)

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Journal Article: Choice with Endogenous Categorization (2022)
Working Paper: Choice with endogenous categorization (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2005.05196

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