How Many Mechanisms? Measuring Parsimony in Risky Choice

Avner Seror

Papers from arXiv.org

Abstract: Behavioral theories rest on parsimony: a small number of mechanisms organizing many decisions. We define a Maximum Rule Concentration Index that measures how parsimoniously a dataset of risky choices can be organized through a library of simple, parameter-free decision rules drawn from canonical behavioral theories: salience, regret, disappointment, modal-payoff focusing, extreme-outcome screening, and limited attention. Applied to three lottery-choice datasets, the data exhibit detectable parsimony: for a majority of subjects, observed concentration exceeds what standard utility models generate on the same menus. The concentration organizes around salience thinking, modal-payoff focusing, and regret.

Date: 2026-01, Revised 2026-05
New Economics Papers: this item is included in nep-cbe and nep-upt
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