Rationalizing Boundedly Rational Choice: Sequential Rationalizability and Rational Shortlist Methods
28 Pages Posted: 11 Aug 2004
Date Written: August 2004
A sequentially rationalizable choice function is a choice function which can be obtained by applying sequentially a fixed set of asymmetric binary relations (rationales). A Rational ShortlistMethod (RSM) is a choice function which is sequentially rationalizable by two rationales. These concepts translate into economic language some human choice heuristics studied in psychology. We provide a full characterization of RSMs and study some properties of sequential rationalizability. These properties allow some degree of menu dependence in choice.
Keywords: rationalizability of choice, bounded rationality, intransitive choice, incomplete preferences, menu dependence
JEL Classification: D0
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