Rationalizable Choice and Standards of Behavior

Josep E. Peris and Begoña Subiza

No 15-5, QM&ET Working Papers from University of Alicante, D. Quantitative Methods and Economic Theory

Abstract: Two independent approaches have been used in order to analyze individual or collective choices. A prominent notion is rationality: individuals choose alternatives maximizing binary relations. This natural property turns out to be problematic, especially in social choice, and gives rise to the well-known Arrow's impossibility result. A different analysis is to observe choices in terms of standards of behavior, as proposed by von Neumann and Morgenstern 1944) with the notion of stable sets. Although stability seems a desirable property to be fulfilled by any choice function, the usual choice functions in tournaments (top cycle, uncovered set, minimal covering,...) do not fulfill it. We introduce a new stability concept (v-stability) that in turn extends the notion of rationality. We prove that the usual tournament choice functions fulfill this new stability condition.

Keywords: Choice function; rationalizable choice; stable set; vstability (search for similar items in EconPapers)
JEL-codes: D11 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2015-06-11
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Persistent link: https://EconPapers.repec.org/RePEc:ris:qmetal:2015_005

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