How would a boundedly rational agent react to a larger menu? I model choice from an unobservable, subjective consideration subset. Consideration sets satisfy Sen’s property alpha: larger objective choice sets can generate smaller consideration sets. The contribution of this paper is a representation of choice among menus: choice sets are only as valuable as the best item in their subjective subsets, so larger sets can be worse. Unlike people facing temptation, a boundedly rational decision maker can strictly prefer both of two choice sets to their union. This model of intertemporal choice reflects how an agent who satisfies Weak WARP would choose, if sophisticated about her bounded rationality.

Ed. by Cervellati, Matteo / Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier / Schipper, Burkhard
1 Issue per year
Increased IMPACT FACTOR 2011: 0.490
Issues
Volume 12 (2012)
Volume 11 (2011)
Volume 10 (2010)
Volume 9 (2009)
Volume 8 (2008)
Volume 7 (2007)
Volume 6 (2006)
Volume 5 (2005)
Volume 4 (2004)
Volume 3 (2003)
Volume 2 (2002)
Volume 1 (2001)
Most Downloaded Articles
- Ascending Auctions with Package Bidding by Ausubel, Lawrence M and Milgrom, Paul R
- Seller Cheap Talk in Almost Common Value Auction by LI, Daniel Zhiyun
- Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition by Farrell, Joseph and Shapiro, Carl
- Strategic Effects of Renegotiation-Proof Contracts by Gerratana, Emanuele and Koçkesen, Levent
- An Experimental Comparison of Sequential First- and Second-Price Auctions with Synergies by Leufkens, Kasper/ Peeters, Ronald and Vorsatz, Marc
Intertemporal Bounded Rationality as Consideration Sets with Contraction Consistency
Dean Spears1
1Princeton University, dspears@princeton.edu
Citation Information: The B.E. Journal of Theoretical Economics. Volume 11, Issue 1, Pages –, ISSN (Online) 1935-1704, DOI: 10.2202/1935-1704.1780, June 2011
Publication History:
- Published Online:
- 2011-06-08
Keywords: consideration set; intertemporal choice; choice theory; contraction consistency; Sen’s property alpha; Weak WARP; axioms


















Comments (0)