IDEAS home Printed from https://ideas.repec.org/p/pri/econom/2021-60.html
   My bibliography  Save this paper

Inferential Choice Theory

Author

Listed:
  • Narayanaswamy Balakrishnan

    (McMaster University)

  • Efe A. Ok

    (New York University)

  • Pietro Ortoleva

    (Princeton University)

Abstract

Despite being the fundamental primitive of the study of decision-making in economics, choice correspondences are not observable: even for a single menu of options, we observe at most one choice of an individual at a given point in time, as opposed to the set of all choices she deems most desirable in that menu. However, it may be possible to observe a person choose from a feasible menu at various times, repeatedly. We propose a method of inferring the choice correspondence of an individual from this sort of choice data. First, we derive our method axiomatically, assuming an ideal dataset. Next, we develop statistical techniques to implement this method for real-world situations where the sample at hand is often fairly small. As an application, we use the data of two famed choice experiments from the literature to infer the choice correspondences of the participating subjects.

Suggested Citation

  • Narayanaswamy Balakrishnan & Efe A. Ok & Pietro Ortoleva, 2021. "Inferential Choice Theory," Working Papers 2021-60, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2021-60
    as

    Download full text from publisher

    File URL: http://pietroortoleva.com/papers/InferentialChoiceTheory.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sautua, Santiago I., 2017. "Does uncertainty cause inertia in decision making? An experimental study of the role of regret aversion and indecisiveness," Journal of Economic Behavior & Organization, Elsevier, vol. 136(C), pages 1-14.
    2. Sandroni Alvaro & Ludwig Sandra & Kircher Philipp, 2013. "On the Difference between Social and Private Goods," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 13(1), pages 151-177, June.
    3. Yusufcan Masatlioglu & Daisuke Nakajima & Erkut Y. Ozbay, 2012. "Revealed Attention," American Economic Review, American Economic Association, vol. 102(5), pages 2183-2205, August.
    4. Georgios Gerasimou, 2021. "Towards Eliciting Weak or Incomplete Preferences in the Lab: A Model-Rich Approach," Papers 2111.14431, arXiv.org, revised Dec 2023.
    5. Marina Agranov & Pietro Ortoleva, 2017. "Stochastic Choice and Preferences for Randomization," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 40-68.
    6. Simone Cerreia-Vioglio & David Dillenberger & Pietro Ortoleva & Gil Riella, 2019. "Deliberately Stochastic," American Economic Review, American Economic Association, vol. 109(7), pages 2425-2445, July.
      • Simone Cerreia-Vioglio & David Dillenberger & Pietro Ortoleva & Gil Riella, 2012. "Deliberately Stochastic," PIER Working Paper Archive 17-013, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 25 May 2017.
    7. B. Douglas Bernheim, 2009. "Behavioral Welfare Economics," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 267-319, 04-05.
    8. Chambers,Christopher P. & Echenique,Federico, 2016. "Revealed Preference Theory," Cambridge Books, Cambridge University Press, number 9781107087804, September.
    9. Marina Agranov & Pietro Ortoleva, 2021. "Ranges of Randomization," Working Papers 2021-72, Princeton University. Economics Department..
    10. Tserenjigmid, Gerelt, 2015. "Theory of decisions by intra-dimensional comparisons," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 326-338.
    11. Rubinstein, Ariel, 2002. "Irrational diversification in multiple decision problems," European Economic Review, Elsevier, vol. 46(8), pages 1369-1378, September.
    12. Cohen, Michele & Jaffray, Jean-Yves & Said, Tanios, 1987. "Experimental comparison of individual behavior under risk and under uncertainty for gains and for losses," Organizational Behavior and Human Decision Processes, Elsevier, vol. 39(1), pages 1-22, February.
    13. B. Douglas Bernheim & Antonio Rangel, 2009. "Beyond Revealed Preference: Choice-Theoretic Foundations for Behavioral Welfare Economics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(1), pages 51-104.
    14. Paola Manzini & Marco Mariotti, 2007. "Sequentially Rationalizable Choice," American Economic Review, American Economic Association, vol. 97(5), pages 1824-1839, December.
    15. Iverson, G. & Falmagne, J. -C., 1985. "Statistical issues in measurement," Mathematical Social Sciences, Elsevier, vol. 10(2), pages 131-153, October.
    16. Nishimura, Hiroki & Ok, Efe A., 2014. "Non-existence of continuous choice functions," Journal of Economic Theory, Elsevier, vol. 153(C), pages 376-391.
    17. Bin Miao & Songfa Zhong, 2018. "Probabilistic social preference: how Machina’s Mom randomizes her choice," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(1), pages 1-24, January.
    18. Greenberg, Spencer & Mohri, Mehryar, 2014. "Tight lower bound on the probability of a binomial exceeding its expectation," Statistics & Probability Letters, Elsevier, vol. 86(C), pages 91-98.
    19. R. Kaas & J.M. Buhrman, 1980. "Mean, Median and Mode in Binomial Distributions," Statistica Neerlandica, Netherlands Society for Statistics and Operations Research, vol. 34(1), pages 13-18, March.
    20. Cettolin, Elena & Riedl, Arno, 2019. "Revealed preferences under uncertainty: Incomplete preferences and preferences for randomization," Journal of Economic Theory, Elsevier, vol. 181(C), pages 547-585.
    21. B. Douglas Bernheim & Antonio Rangel, 2007. "Toward Choice-Theoretic Foundations for Behavioral Welfare Economics," American Economic Review, American Economic Association, vol. 97(2), pages 464-470, May.
    22. Manzini, Paola & Mariotti, Marco, 2018. "Dual random utility maximisation," Journal of Economic Theory, Elsevier, vol. 177(C), pages 162-182.
    23. Eric Danan & Anthony Ziegelmeyer, 2006. "Are preferences complete? An experimental measurement of indecisiveness under risk," Papers on Strategic Interaction 2006-01, Max Planck Institute of Economics, Strategic Interaction Group.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Elias Bouacida, 2021. "Identifying Choice Correspondences," Working Papers 327800275, Lancaster University Management School, Economics Department.
    2. Rêgo, Leandro Chaves & Kilgour, D. Marc, 2022. "Choice stabilities in the graph model for conflict resolution," European Journal of Operational Research, Elsevier, vol. 301(3), pages 1064-1071.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Qiyan Ong & Jianying Qiu, 2023. "Paying for randomization and indecisiveness," Journal of Risk and Uncertainty, Springer, vol. 67(1), pages 45-72, August.
    2. Yuta Inoue, 2020. "Growing Consideration," Working Papers 2003, Waseda University, Faculty of Political Science and Economics.
    3. Eddie Dekel & Barton L. Lipman, 2010. "How (Not) to Do Decision Theory," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 257-282, September.
    4. Hiroki Nishimura, 2014. "The Transitive Core: Inference of Welfare from Nontransitive Preference Relations," Working Papers 201419, University of California at Riverside, Department of Economics.
    5. Nishimura, Hiroki, 2018. "The transitive core: inference of welfare from nontransitive preference relations," Theoretical Economics, Econometric Society, vol. 13(2), May.
    6. 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.
    7. Chew, Soo Hong & Miao, Bin & Shen, Qiang & Zhong, Songfa, 2022. "Multiple-switching behavior in choice-list elicitation of risk preference," Journal of Economic Theory, Elsevier, vol. 204(C).
    8. Cettolin, Elena & Riedl, Arno, 2019. "Revealed preferences under uncertainty: Incomplete preferences and preferences for randomization," Journal of Economic Theory, Elsevier, vol. 181(C), pages 547-585.
    9. Ghosal, Sayantan & Dalton, Patricio, 2013. "Characterizing Behavioral Decisions with Choice Data," CAGE Online Working Paper Series 107, Competitive Advantage in the Global Economy (CAGE).
    10. Jose Apesteguia & Miguel A. Ballester, 2015. "A Measure of Rationality and Welfare," Journal of Political Economy, University of Chicago Press, vol. 123(6), pages 1278-1310.
    11. Christopher Tyson, 2015. "Satisficing behavior with a secondary criterion," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 44(3), pages 639-661, March.
    12. Carlos Alós-Ferrer & Ernst Fehr & Nick Netzer, 2021. "Time Will Tell: Recovering Preferences When Choices Are Noisy," Journal of Political Economy, University of Chicago Press, vol. 129(6), pages 1828-1877.
    13. Miguel A. Costa‐Gomes & Carlos Cueva & Georgios Gerasimou & Matúš Tejiščák, 2022. "Choice, deferral, and consistency," Quantitative Economics, Econometric Society, vol. 13(3), pages 1297-1318, July.
    14. Elias Bouacida, 2021. "Identifying Choice Correspondences," Working Papers 327800275, Lancaster University Management School, Economics Department.
    15. Paola Manzini & Marco Mariotti, 2015. "State dependent choice," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(2), pages 239-268, September.
    16. Francesco Cerigioni, 2021. "Dual Decision Processes: Retrieving Preferences When Some Choices Are Automatic," Journal of Political Economy, University of Chicago Press, vol. 129(6), pages 1667-1704.
    17. Yusufcan Masatlioglu & Daisuke Nakajima & Erkut Y. Ozbay, 2012. "Revealed Attention," American Economic Review, American Economic Association, vol. 102(5), pages 2183-2205, August.
    18. Nosratabadi, Hassan, 2022. "Reference-dependent choice under plurality rule," Mathematical Social Sciences, Elsevier, vol. 115(C), pages 88-98.
    19. Chambers, Christopher P. & Hayashi, Takashi, 2012. "Choice and individual welfare," Journal of Economic Theory, Elsevier, vol. 147(5), pages 1818-1849.
    20. Gian Caspari & Manshu Khanna, 2021. "Non-Standard Choice in Matching Markets," Papers 2111.06815, arXiv.org, revised Aug 2024.

    More about this item

    Keywords

    Choice Correspondences; Estimation; Stochastic Choice Functions; Transitivity of Preferences;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pri:econom:2021-60. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bobray Bordelon (email available below). General contact details of provider: https://edirc.repec.org/data/deprius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.