Similarity-based mistakes in choice

F. Payró, Levent Ülkü

Research output: Contribution to journalArticleResearchpeer-review

5 Citations (Scopus)
1 Downloads (Pure)

Abstract

We characterize the following choice procedure. The decision maker is endowed with two binary relations over alternatives, a preference and a similarity. In every choice problem she includes in her choice set all alternatives which are similar to the best feasible alternative. Hence she can, by mistake, choose an inferior option because it is similar to the best. We characterize this boundedly rational behavior by suitably weakening the rationalizability axiom of Arrow (1959). We also characterize a variation where the decision maker chooses alternatives on the basis of their similarities to attractive yet infeasible options. We show that similarity-based mistakes of either kind lead to cyclical behavior.
Original languageEnglish
Pages (from-to)152-156
JournalJournal of Mathematical Economics
Volume61
DOIs
Publication statusPublished - Dec 2015

Keywords

  • Bounded rationality
  • similarity
  • mistakes
  • cyclic choice

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