Justifiable Choice

27 Pages Posted: 30 Jun 2009 Last revised: 31 Mar 2014

Date Written: July 1, 2010

Abstract

Simonson and Tversky (Journal of Marketing Research, 1992) demonstrated that the tendency to choose an alternative is enhanced or hindered depending on whether the tradeoffs within the set under consideration are favorable or unfavorable to that option (tradeoff contrast effect). In this paper we present an axiom that formulates this effect, and show that it yields a multiple utility representation in von-Neumann-Morgenstern framework: there is a unique convex set of vN-M utilities, such that an element is chosen if and only if it is best with respect to one of the utilities in this set. Similarly, we apply this axiom to Anscombe-Aumann framework and obtain a multiple prior representation. Finally, we study the notions of indifference, indecisiveness, and being more decisive in our models.

Keywords: rational choice, multiple priors, multiple rationals, tradeoff contrast effect

JEL Classification: D81

Suggested Citation

Heller, Yuval, Justifiable Choice (July 1, 2010). Games and Economic Behavior, Vol. 76, No. 2, 2012, Available at SSRN: https://ssrn.com/abstract=1417277 or http://dx.doi.org/10.2139/ssrn.1417277

Yuval Heller (Contact Author)

Bar Ilan University ( email )

Dept. of Economics, Building 504
Bar Ilan University
Ramat Gan, 5290002
Israel
+972 5252 82182 (Phone)

HOME PAGE: http://https://sites.google.com/site/yuval26/

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