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Satisficing and (un)bounded rationality--A formal definition and its experimental validity

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  • Güth, Werner

Abstract

Based on exogenously given or idiosyncratically expected scenarios satisficing is formally defined and shown to include rationality as an unlikely border case. Our approach suggests new ways of defining risk attitudes and has been applied to risky choice problems and (stochastic) market games. Contrary to revealed preferences where one infers goals from observed choices, the experimental tests do not only elicit choice behavior but also aspirations and, if necessary, idiosyncratic expectations.

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  • Güth, Werner, 2010. "Satisficing and (un)bounded rationality--A formal definition and its experimental validity," Journal of Economic Behavior & Organization, Elsevier, vol. 73(3), pages 308-316, March.
    • Handle: RePEc:eee:jeborg:v:73:y:2010:i:3:p:308-316
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    Cited by:

    1. Berg, Nathan & Kim, Jeong-Yoo, 2010. "Demand for Self Control: A model of Consumer Response to Programs and Products that Moderate Consumption," MPRA Paper 26593, University Library of Munich, Germany.
    2. Friederike Wall, 2021. "Modeling Managerial Search Behavior based on Simon's Concept of Satisficing," Papers 2104.14002, arXiv.org, revised May 2021.
    3. Werner Güth & Maria Vittoria Levati & Matteo Ploner, 2012. "Satisficing And Prior‐Free Optimality In Price Competition," Economic Inquiry, Western Economic Association International, vol. 50(2), pages 470-483, April.
    4. Friederike Wall, 2023. "Modeling managerial search behavior based on Simon’s concept of satisficing," Computational and Mathematical Organization Theory, Springer, vol. 29(2), pages 265-299, June.
    5. Alfio Giarlotta & Angelo Petralia, 2024. "Simon’s bounded rationality," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 47(1), pages 327-346, June.

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