Context-Dependent Choice as Explained by Foraging Theory
29 Pages Posted: 10 Nov 2015 Last revised: 25 Jan 2018
Date Written: February 2, 2016
An agent makes consumption choices in multiple periods. Choice objects vary in type and quality; objects of the same type are inter-temporal substitutes. The current choice set is informative about the distribution over future choice sets. Thus, the presence of unchosen alternatives may rationally alter the agent's choice. Under some simple assumptions, the optimal policy exhibits context-dependent choice behavior, such as the decoy effect and choice overload.
Keywords: Decoy effect, Choice overload, Foraging theory, Consumer choice, Dynamic stochastic choice model, Monotone comparative statics
JEL Classification: D11, D83, D90, M31
Suggested Citation: Suggested Citation