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A Theory of Procedurally Rational Choice: Optimization without Evaluation

Author

Listed:
  • Stefano Ficco

    (Erasmus Universiteit Rotterdam)

  • Vladimir Karamychev

    (Erasmus Universiteit Rotterdam)

  • Peran van Reeven

    (Erasmus Universiteit Rotterdam)

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.

Suggested Citation

  • Stefano Ficco & Vladimir Karamychev & Peran van Reeven, 2006. "A Theory of Procedurally Rational Choice: Optimization without Evaluation," Tinbergen Institute Discussion Papers 06-001/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20060001
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Bounded rationality; optimal selection procedure; procedural rationality;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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