Reason-Based Rationalization

50 Pages Posted: 27 Nov 2013

See all articles by Franz Dietrich

Franz Dietrich

Paris School of Economics & CNRS

Christian List

LMU Munich; London School of Economics

Date Written: November 25, 2013

Abstract

We introduce a “reason-based” way of rationalizing an agent's choice behaviour, which explains choices by specifying which properties of the options or choice context the agent cares about (the “motivationally salient properties”) and how he or she cares about these properties (the “fundamental preference relation”). Reason-based rationalizations can explain non-classical choice behaviour, including boundedly rational and sophisticated rational behaviour, and predict choices in unobserved contexts, an issue neglected in standard choice theory. We characterize the behavioural implications of different reason-based models and distinguish two kinds of context-dependent motivation: “context-variant” motivation, where the agent cares about different properties in different contexts, and “context-regarding” motivation, where the agent cares not only about properties of the options, but also about properties relating to the context.

Keywords: choice theory, rationalization, non-classical choice behaviour, bounded rationality, sophisticated rationality, context-dependence, framing, revealed preferences, prediction of choice

JEL Classification: D00, D11, D80

Suggested Citation

Dietrich, Franz and List, Christian, Reason-Based Rationalization (November 25, 2013). Available at SSRN: https://ssrn.com/abstract=2359553 or http://dx.doi.org/10.2139/ssrn.2359553

Franz Dietrich

Paris School of Economics & CNRS ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

HOME PAGE: http://www.franzdietrich.net

Christian List (Contact Author)

LMU Munich ( email )

Munich
Germany

London School of Economics ( email )

London
United Kingdom

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