Paper #1309

Title:

Choice by sequential procedures

Authors:

Jose Apesteguia and Miguel A. Ballester

Date:

February 2012

Abstract:

We propose a rule of decision-making, the sequential procedure guided by routes, and show that three influential boundedly rational choice models can be equivalently understood as special cases of this rule. In addition, the sequential procedure guided by routes is instrumental in showing that the three models are intimately related. We show that choice with a status-quo bias is a refinement of rationalizability by game trees, which, in turn, is also a refinement of sequential rationalizability. Thus, we provide a sharp taxonomy of these choice models, and show that they all can be understood as choice by sequential procedures.

Keywords:

Individual rationality, Bounded rationality, Behavioral economics.

JEL codes:

D01.

Area of Research:

Behavioral and Experimental Economics / Microeconomics

Published in:

Games and Economic Behavior, 77: 90-99, January 2013

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