A salience theory of choice errors
Abstract
We study a psychologically based foundation for choice errors. The decision maker applies a preference ranking after forming a ?consideration set?prior to choosing an alternative. Membership of the consideration set is determined both by the alternative speci?c salience and by the rationality of the agent (his general propensity to consider all alternatives). The model turns out to include a logit formulation as a special case. In general, it has a rich set of implications both for exogenous parameters and for a situation in which alternatives can a¤ect their own salience (salience games). Such implications are relevant to assess the link between ?revealed? preferences and ?true?preferences: for example, less rational agents may paradoxically express their preference through choice more truthfully than more rational agents.
Citation
Manzini , P & Mariotti , M 2010 ' A salience theory of choice errors ' School of Economics & Finance Discussion Paper , no. 1003 , University of St Andrews .
ISSN
0962-4031Type
Working or discussion paper
Rights
(c) the author
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