A Theory of Procedurally Rational Choice: Optimization without Evaluation

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.

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Year of publication:	2006
Authors:	Ficco, Stefano ; Karamychev, Vladimir ; van Reeven, Peran
Publisher:	Amsterdam and Rotterdam : Tinbergen Institute
Subject:	Bounded rationality \| optimal selection procedure \| procedural rationality

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Series:	Tinbergen Institute Discussion Paper ; 06-001/1
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	837394201 [GVK] hdl:10419/86243 [Handle] RePEc:dgr:uvatin:20060001 [RePEc]
Classification:	D01 - Microeconomic Behavior: Underlying Principles ; D81 - Criteria for Decision-Making under Risk and Uncertainty
Source:	EconStor

Persistent link: https://www.econbiz.de/10010325206