Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2006-01-06
Number: 06-001/1
Author-Name: Stefano Ficco
Author-Email: ficco@few.eur.nl
Author-Workplace-Name: Erasmus Universiteit Rotterdam
Author-Name: Vladimir Karamychev
Author-Email: karamychev@few.eur.nl
Author-Workplace-Name: Erasmus Universiteit Rotterdam
Author-Name: Peran van Reeven
Author-Email: vanreeven@few.eur.nl
Author-Workplace-Name: Erasmus Universiteit Rotterdam
Title: A Theory of Procedurally Rational Choice: Optimization without Evaluation
Abstract: This paper analyses the behavior of an individual who wants to maximize his utility function, but he is not able to evaluate it. There are many ways to choose a single alternative from a given set. We show that a unique utility maximizing procedure exists. Choices induced by this optimal procedure are always transitive but generally violate the Weak Axiom. In other words, utility maximizing individuals who are unable to evaluate their objective functions fail to exhibit rational revealed preferences.
Classification-JEL: D01; D81
Keywords: Bounded rationality; optimal selection procedure; procedural rationality
File-Url: https://papers.tinbergen.nl/06001.pdf
File-Format: application/pdf
File-Size: 280474 bytes
Handle: RePEc:tin:wpaper:20060001