Paper #1089

Title:

A characterization of sequential rationalizability

Authors:

Jose Apesteguia and Miguel A. Ballester

Date:

May 2008

Abstract:

A choice function is sequentially rationalizable if there is an ordered collection of asymmetric binary relations that identifies the selected alternative in every choice problem. We propose a property, F-consistency, and show that it characterizes the notion of sequential rationalizability. F-consistency is a testable property that highlights the behavioral aspects implicit in sequentially rationalizable choice. Further, our characterization result provides a novel tool with which to study how other behavioral concepts are related to sequential rationalizability, and establish a priori unexpected implications. In particular, we show that the concept of rationalizability by game trees, which, in principle, had little to do with sequential rationalizability, is a refinement of the latter. Every choice function that is rationalizable by a game tree is also sequentially rationalizable. Finally, we show that some prominent voting mechanisms are also sequentially rationalizable.

Keywords:

Individual rationality, Rationalizability, Consistency, Bounded rationality, Behavioral economics, Voting

JEL codes:

B41, D01

Area of Research:

Microeconomics

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