Rational indecisive choice

This paper proposes and characterises two preference-based choice rules that allow the decision maker to choose nothing if the criteria associated with them are satisfied by no feasible alternative. Strict preferences are primitive in the first rule and weak preferences in the second. Each of them includes the corresponding utility-maximisation theory of rational choice as a special case. The first one explains changes in the magnitude of context effects observed in experiments that allow for indecision. The second offers one explanation of experimental findings suggesting that choice is more likely to be made from small rather than from large sets. The general conclusion in both cases is that an individual conforms to meaningful and testable principles of choice consistency whenever assumed to be occasionally indecisive.Rationality; indecision; incomplete preferences; choice rules

Consumer theory with bounded rational preferences

The neoclassical consumer maximizes utility and makes choices by completely preordering the feasible alternatives and weighing when indifferent. The consumer studied in this paper chooses by weighing when indifferent and also when indecisive, without necessarily preordering the alternatives or exhausting her budget. Preferences therefore need not be complete, transitive or non-satiated but are assumed strictly convex and "adaptive". The latter axiom is new and parallels that of ambiguity aversion in choice under uncertainty.preferences: incomplete, intransitive, convex, adaptive; representation; demand.

The Decision-Conflict and Multicriteria Logit

We study two tractable random non-forced choice models that explain behavioural patterns suggesting that the choice-deferral outside option is often selected when people find it hard to decide between the market alternatives available to them, even when these are few and desirable. The *decision-conflict logit* extends the logit model with an outside option by assigning a menu-dependent value to that option. This value captures the degree of complexity/decision difficulty at the relevant menu and allows for the choice probability of the outside option to either increase or decrease when the menu is expanded, depending on *how many* as well as *how attractive* options are added to it. The *multicriteria logit* is a special case of this model and introduces multiple utility functions that jointly predict behaviour in a multiplicative-logit way. Every multicriteria logit admits a simple discrete-choice formulation

Partially dominant choice

This paper proposes and analyzes a model of context-dependent choice with stable but incomplete preferences that is based on the idea of partial dominance: An alternative is chosen from a menu if it is not worse than anything in the menu and is also better than something else. This choice procedure provides a simple explanation of the attraction/decoy effect. It reduces to rational choice when preferences are complete in two ways that are made precise. Some preference identification and choice consistency properties associated with this model are analyzed, and certain ways in which its predictions differ from those of other recently proposed models of the attraction effect are also discussed.PostprintPeer reviewe

Asymmetric dominance, deferral and status quo bias in a behavioral model of choice

This paper proposes and axiomatically characterizes a model of choice that builds on the criterion of partial dominance and allows for two types of avoidant behavior: *choice deferral* and *status quo bias*. These phenomena are explained in a unified way that allows for a clear theoretical distinction between them to be made. The model also explains the *strengthening of the attraction effect* that has been observed when deferral is permissible. Unlike other models of status quo biased behavior, the one analyzed in this paper builds on a *unique*, reference-independent preference relation that is acyclic and generally incomplete. When this relation is complete, the model reduces to rational choice.PostprintPeer reviewe

Duopolistic competition with choice-overloaded consumers

We thank Luke Froeb, Paola Manzini, Patrick Rey, Ariel Rubinstein, Yuval Salant, Rann Smorodinsky, Hugo Sonnenschein, David Ulph, Nikolaos Vettas, Rakesh Vohra, audiences at Bounded Rationality in Choice (2016, Northwestern), Bounded Rationality & Mechanism Design (2016, Glasgow), St Andrews, Technion, Athens University of Economics & Business and especially two referees of this journal for helpful comments. Any errors are our own.Peer reviewedPostprin

Preference conditions for invertible demand functions

It is frequently assumed in several domains of economics that demand functions are invertible in prices. At the primitive level of preferences, however, the corresponding characterization has remained elusive. We identify necessary and sufficient conditions on a utility-maximizing consumer’s preferences for her demand function to be continuous and invertible: strict convexity, strict monotonicity, and differentiability in the sense of Rubinstein (2006). We further show that Rubinstein differentiability is equivalent to the indifference sets being smooth, which is weaker than Debreu’s (1972) notion of preference smoothness. We finally discuss implications of our analysis for demand functions that satisfy the “strict law of demand.”Publisher PDFPeer reviewe

(Hemi)Continuity of additive preference preorders

It is shown that the two common notions of topological continuity for preference preorders, which require closed contour sets and a closed graph respectively, are equivalent even when completeness is not assumed, provided that the domain is a normed linear space or a topological group and the preorder is additive.PostprintPeer reviewe