Choice, deferral and consistency
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In this paper we study decision making in situations where the individual's preferences are not assumed to be complete. First, we identify conditions that are necessary and sufficient for choice behavior in general domains to be consistent with maximization of a possibly incomplete preference relation. In this model of maximally dominant choice, the agent defers/avoids choosing at those and only those menus where a most preferred option does not exist. This allows for simple explanations of conflict-induced deferral and choice overload. It also suggests a criterion for distinguishing between indifference and incomparability based on observable data. A simple extension of this model also incorporates decision costs and provides a theoretical framework that is compatible with the experimental design that we propose to elicit possibly incomplete preferences in the lab. The design builds on the introduction of monetary costs that induce choice of a most preferred feasible option if one exists and deferral otherwise. Based on this design we found evidence suggesting that a quarter of the subjects in our study had incomplete preferences, and that these made significantly more consistent choices than a group of subjects who were forced to choose. The latter effect, however, is mitigated once data on indifferences are accounted for.
Costa-Gomes , M , Cueva , C & Gerasimou , G 2014 ' Choice, deferral and consistency ' School of Economics & Finance Discussion Paper , no. 1416 , University of St Andrews , pp. 1-48 .
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(c) the author 2014
DescriptionGerasimou and Costa-Gomes gratefully acknowledge financial support from the British Academy (Grant SG122338)
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