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Monotone threshold representations

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    (Cowles Foundation for Research in Economics, Yale University)

Abstract

Motivated by the literature on ``choice overload'', we study a boundedly rational agent whose choice behavior admits a \textit{monotone threshold representation}: There is an underlying rational benchmark, corresponding to maximization of a utility function $v$, from which the agent's choices depart in a menu-dependent manner. The severity of the departure is quantified by a threshold map $\delta$, which is monotone with respect to set inclusion. We derive an axiomatic characterization of the model, extending familiar characterizations of rational choice. We classify monotone threshold representations as a special case of Simon's theory of ``satisficing'', but as strictly more general than both Tyson's (2008) ``expansive satisficing'' model as well as Fishburn (1975) and Luce's (1956) model of choice behavior generated by a semiorder. We axiomatically characterize the difference, providing novel foundations for these models.

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  • ,, 2016. "Monotone threshold representations," Theoretical Economics, Econometric Society, vol. 11(3), September.
    • Handle: RePEc:the:publsh:1547
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    References listed on IDEAS

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    1. Tyson, Christopher J., 2008. "Cognitive constraints, contraction consistency, and the satisficing criterion," Journal of Economic Theory, Elsevier, vol. 138(1), pages 51-70, January.
    2. , & ,, 2013. "Choice by iterative search," Theoretical Economics, Econometric Society, vol. 8(3), September.
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    6. Mandler, Michael & Manzini, Paola & Mariotti, Marco, 2012. "A million answers to twenty questions: Choosing by checklist," Journal of Economic Theory, Elsevier, vol. 147(1), pages 71-92.
    7. Tyson, Christopher J., 2008. "Cognitive constraints, contraction consistency, and the satisficing criterion," Journal of Economic Theory, Elsevier, vol. 138(1), pages 51-70, January.
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    11. Tyson, Christopher J., 2008. "Cognitive constraints, contraction consistency, and the satisficing criterion," Journal of Economic Theory, Elsevier, vol. 138(1), pages 51-70, January.
    12. Efe A. Ok & Pietro Ortoleva & Gil Riella, 2015. "Revealed (P)Reference Theory," American Economic Review, American Economic Association, vol. 105(1), pages 299-321, January.
    13. Huber, Joel & Payne, John W & Puto, Christopher, 1982. "Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 9(1), pages 90-98, June.
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    Citations

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    Cited by:

    1. Deb, Joyee & Zhou, Jidong, 2018. "Reference Dependence and Choice Overload," MPRA Paper 86261, University Library of Munich, Germany.
    2. repec:hal:psewpa:halshs-01998001 is not listed on IDEAS
    3. Aguiar, Victor H. & Kimya, Mert, 2019. "Adaptive stochastic search," Journal of Mathematical Economics, Elsevier, vol. 81(C), pages 74-83.
    4. Huseynov, Samir & Palma, Marco A. & Ahmad, Ghufran, 2021. "Does the magnitude of relative calorie distance affect food consumption?," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 530-551.
    5. Georgios Gerasimou, 2020. "The Decision-Conflict Logit," Papers 2008.04229, arXiv.org, revised Aug 2023.
    6. Elias Bouacida, 2021. "Identifying Choice Correspondences," Working Papers 327800275, Lancaster University Management School, Economics Department.
    7. D. Pennesi, 2016. "When perfectionism becomes willpower," Working Papers wp1050, Dipartimento Scienze Economiche, Universita' di Bologna.
    8. Caliari, Daniele, 2023. "Behavioural welfare analysis and revealed preference: Theory and experimental evidence," Discussion Papers, Research Unit: Economics of Change SP II 2023-303, WZB Berlin Social Science Center.
    9. Barokas, Guy, 2024. "Positively correlated choice," Mathematical Social Sciences, Elsevier, vol. 127(C), pages 62-71.
    10. Elias Bouacida, 2021. "Identifying Choice Correspondences," Working Papers halshs-01998001, HAL.
    11. Maltz, Amnon & Rachmilevitch, Shiran, 2021. "A model of menu-dependent evaluations and comparison-aversion," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 91(C).
    12. Xiaosheng Mu, 2019. "Amendment Voting with Incomplete Preferences," Working Papers 2019-29, Princeton University. Economics Department..
    13. Gerasimou, Georgios & Papi, Mauro, 2018. "Duopolistic competition with choice-overloaded consumers," European Economic Review, Elsevier, vol. 101(C), pages 330-353.
    14. Dan Qin, 2021. "A Note on Numerical Representations of Nested System of Strict Partial Orders," Games, MDPI, vol. 12(3), pages 1-9, July.
    15. Daniele Pennesi, 2018. "Perfectionism and willpower," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 6(1), pages 101-110, April.
    16. Qin, Dan, 2024. "A simple model of two-stage choice," Journal of Mathematical Economics, Elsevier, vol. 112(C).

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    More about this item

    Keywords

    Bounded rationality; threshold representations; satisficing; choice; revealed preference;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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