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Title:Two-stage boundedly rational choice procedures: Theory and experimental evidence PDF Logo
Authors:Manzini, Paola
Mariotti, Marco
Issue Date:2006
Series/Report no.:Working Paper, Department of Economics, Queen Mary, University of London 561
Abstract:We study and test a class of boundedly rational models of decision making which rely on sequential eliminative heuristics. We formalize two sequential decision procedures, both inspired by plausible models popular among several psychologists and marketing scientists. However we follow a standard `revealed preference' economic approach by fully characterizing these procedures by few, simple and testable conditions on observed choice. Then we test the models (as well as the standard utility maximization model) with experimental data. We find that the large majority of individuals behave in a way consistent with one of our procedures, and inconsistent with the utility maximization model.
Subjects:Bounded rationality, Choice experiments
JEL:C91
D9
Document Type:Working Paper
Appears in Collections:Working Paper Series, School of Economics and Finance, Queen Mary, University of London

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