Order-k rationality
Barberà, Salvador 1946- (Universitat Autònoma de Barcelona. Departament d'Economia i d'Història Econòmica)
de Clippel, Geoffroy (Brown University)
Neme, Alejandro (Universidad Nacional de San Luis (Argentina))
Rozen, Kareen (Brown University)

Imprint:	Barcelona Barcelona School of Economics, 2019
Description:	27 pàg.
Abstract:	A decision maker (DM) may not perfectly maximize her preference over the feasible set. She may feel it is good enough to maximize her preference over a sufficiently large consideration set; or just require that her choice is sufficiently well-ranked (e. g. , in the top quintile of options); or even endogenously determine a threshold for what is good enough, based on an initial sampling of the options. Heuristics such as these are all encompassed by a common theory of order-k rationality, which relaxes perfect optimization by only requiring choices from a set S to fall within the set's top k(S) elements according to the DM's preference ordering. Heuristics aside, this departure from rationality offers a natural way, in the classic 'as if' tradition, to gradually accommodate more choice patterns as k increases. We characterize the empirical content of order-k rationality (and related theories), and provide a tractable testing method which is comparable to the method of checking SARP.
Grants:	Ministerio de Economía y Competitividad SEV-2015-0563 Agencia Estatal de Investigación ECO2017-83534-P Agència de Gestió d'Ajuts Universitaris i de Recerca 2017/SGR-0711
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Language:	Anglès
Series:	BSE working paper ; 1130
Document:	Working paper ; recerca ; Versió publicada
Subject:	Choice heuristics ; D010 ; Limited attention ; Order-k rationality ; Satisficing
Published in:	BSE Barcelona School of Economics Working Papers, 2019

Adreça alternativa: https://bse.eu/research/working-papers/order-k-rationality

27 p, 610.4 KB

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Research literature > Working papers