A Theory of Procedurally Rational Choice: Optimization without Evaluation

Stefano Ficco (), Vladimir Karamychev and Peran van Reeven
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Stefano Ficco: Erasmus Universiteit Rotterdam

No 06-001/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This paper analyses the behavior of an individual who wants to maximize his utility function, but he is not able to evaluate it. There are many ways to choose a single alternative from a given set. We show that a unique utility maximizing procedure exists. Choices induced by this optimal procedure are always transitive but generally violate the Weak Axiom. In other words, utility maximizing individuals who are unable to evaluate their objective functions fail to exhibit rational revealed preferences.

Keywords: Bounded rationality; optimal selection procedure; procedural rationality (search for similar items in EconPapers)
JEL-codes: D01 D81 (search for similar items in EconPapers)
Date: 2006-01-06
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20060001

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