A Theory of Ex Post Rationalization

Erik Eyster, Shengwu Li and Sarah Ridout

Papers from arXiv.org

Abstract: People rationalize their past choices, even those that were mistakes in hindsight. We propose a formal theory of this behavior. The theory predicts that sunk costs affect later choices. Its model primitives are identified by choice behavior and it yields tractable comparative statics.

Date: 2021-07, Revised 2022-03
New Economics Papers: this item is included in nep-evo, nep-hme, nep-mic and nep-upt
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2107.07491

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