Paper #1048

Title:

On the complexity of rationalizing behavior

Authors:

Jose Apesteguia and Miguel A. Ballester

Date:

September 2007

Abstract:

We study the complexity of rationalizing choice behavior. We do so by analyzing two polar cases, and a number of intermediate ones. In our most structured case, that is where choice behavior is defined in universal choice domains and satisfies the "weak axiom of revealed preference," finding the complete preorder rationalizing choice behavior is a simple matter. In the polar case, where no restriction whatsoever is imposed, either on choice behavior or on choice domain, finding the complete preorders that rationalize behavior turns out to be intractable. We show that the task of finding the rationalizing complete preorders is equivalent to a graph problem. This allows the search for existing algorithms in the graph theory literature, for the rationalization of choice.

Keywords:

Rationalization, Computational complexity, NP-complete, Arbitrary Choice Domains

JEL codes:

D00

Area of Research:

Microeconomics

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