Satisficing with a Variable Threshold

32 Pages Posted: 4 Sep 2017 Last revised: 26 Dec 2018

See all articles by Matthew Kovach

Matthew Kovach

Virginia Polytechnic Institute & State University - Department of Economics

Levent Ulku

Instituto Tecnológico Autónomo de México (ITAM)

Date Written: December 24, 2018

Abstract

We axiomatize a model of satisficing which features random thresholds and the possibility of choice abstention. Given a menu, the decision maker first randomly draws a threshold. Next, using a list order, she searches the menu for alternatives which are at least as good as the threshold. She chooses the first such alternative she finds, and if no such alternative exists, she abstains. Since the threshold is random, so is the resulting behavior. We characterize this model using two simple axioms. In general the revelation of the model’s primitives is incomplete. We characterize a specialization of the model for which the underlying preference and list ordering are uniquely identified by choice frequencies. We also show that our model is a special random utility model.

Keywords: Stochastic Choice, Satisficing, Random Thresholds, Stochastic Consideration

JEL Classification: D0

Suggested Citation

Kovach, Matthew and Ulku, Levent, Satisficing with a Variable Threshold (December 24, 2018). Available at SSRN: https://ssrn.com/abstract=3032039 or http://dx.doi.org/10.2139/ssrn.3032039

Matthew Kovach (Contact Author)

Virginia Polytechnic Institute & State University - Department of Economics ( email )

3016 Pamplin Hall (0316)
880 West Campus Drive
Blacksburg, VA 24061
United States

Levent Ulku

Instituto Tecnológico Autónomo de México (ITAM) ( email )

Av. Camino a Sta. Teresa 930
Col. Héroes de Padierna
Mexico City, D.F. 01000, Federal District 01080
Mexico

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