Rationalizing Choice with Multi-Self Models
42 Pages Posted: 16 Jul 2008 Last revised: 23 May 2012
Date Written: May 22, 2012
This paper studies a class of multi-self decision-making models proposed in economics, psychology, and marketing. In this class, choices arise from the set-dependent aggregation of a collection of utility functions, where the aggregation procedure satisfies some simple properties. We propose a method for characterizing the extent of irrationality in a choice behavior, and use this measure to provide a lower bound on the set of choice behaviors that can be rationalized with n utility functions. Under an additional assumption (scale-invariance), we show that generically at most five "reasons" are needed for every "mistake."
Keywords: Multi-self models, Index of irrationality, IIA violations, Rationalizability
JEL Classification: D11, D13, D71
Suggested Citation: Suggested Citation