(A,f): Choice With Frames

17 Pages Posted: 2 May 2007

See all articles by Yuval Salant

Yuval Salant

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS)

Ariel Rubinstein

Tel Aviv University - Eitan Berglas School of Economics; New York University (NYU) - Department of Economics

Date Written: July 28, 2007

Abstract

In order to incorporate recent developments in Bounded Rationality and Behavioral Economics into Choice Theory, we introduce the notion of an extended choice problem (A,f) where A is a set of alternatives and f is a frame. A frame consists of observable information that appears to be irrelevant to the rational assessment of the alternatives but nonetheless may affect choice. An extended choice function assigns a chosen element to every extended choice problem. We identify conditions under which there exists either a transitive or a transitive and complete binary relation over the alternatives such that an alternative x is chosen in some extended choice problem (A,f) if and only if x is maximal according to the binary relation in the set A. We then investigate several extended choice models in which behavior cannot be described as the maximization of a complete and transitive relation, or alternatively the binary relation provides little information on how the decision maker chooses from extended choice problems. We comment on the possible welfare interpretations of our results along the paper.

Suggested Citation

Salant, Yuval and Rubinstein, Ariel, (A,f): Choice With Frames (July 28, 2007). Available at SSRN: https://ssrn.com/abstract=982211 or http://dx.doi.org/10.2139/ssrn.982211

Yuval Salant (Contact Author)

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS) ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Ariel Rubinstein

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel
+972-3-640-9601 (Phone)
603-388-3630 efax U.S. (Fax)

HOME PAGE: http://www.princeton.edu/~ariel/

New York University (NYU) - Department of Economics ( email )

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New York, NY 10011
United States
1-212-992-9772 (Phone)

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