Prior Knowledge and Monotone Decision Problems
12 Pages Posted: 13 Jul 2018 Last revised: 28 Nov 2018
Date Written: November 24, 2018
This paper identifies cognitive conditions under which a rational individual or group decision-maker will want to commit ex ante to some choice restrictions, in order to get extra information about an uncertain state of nature. We show that the implemented limitations will then bring her to solve a monotone decision problem. This provides a behavioral/microeconomic foundation for the recurrence of this type of problem in many contexts. From another angle, the analysis explains why and when individuals and organizations resort to automatic responses or routines in some circumstances, and how this can shape their environment.
Keywords: Choice architecture; Attention and effort; Design attributes; Routines
JEL Classification: D01, D21, D80, D83
Suggested Citation: Suggested Citation