a b s t r a c tA challenging issue in modern choice theory is how to enrich the kind of data available to the researcher along with our understanding of the decision-making process. We propose an axiomatic characterization of the 'satisficing' heuristic under various informational structures. In particular we examine the cases in which search behavior is both observable, partially observable, and unobservable. We also investigate behavioral definitions of preference and satisfaction and establish uniqueness results. Finally, we relate our framework to several well-known existing models.

We propose a novel experimental design aimed at investigating whether inducing individuals to use certain choice procedures has an effect on the outcome of their decision. Specifically, by implementing a modification of the mouse-tracing method, we induce subjects to use either alternative-based or characteristic-based search procedures in a between-subject lottery-choice experiment. We find that encouraging subjects to search by characteristic systematically makes them choose riskier options. Consistently with existing literature, our evidence indicates that individuals typically look up information within alternatives. However, when induced to search by characteristic, high prizes receive more attention, leading individuals to switch to non-compensatory heuristics and – consequently – make riskier choices. Our findings are robust to variations in the complexity of the choice problem and individual differences in risk-attitudes, CRT scores, and gender.

A large body of empirical work has suggested the existence of a "choice overload" effect in consumer decision making: when faced with large menus of alternatives, decision makers often avoid/indefinitely defer choice. An explanation for the occurrence of this effect is that consumers try to escape the higher cognitive effort that is associated with making an active choice in large menus. Building on this explanation, we propose and analyse a model of duopolistic competition where firms compete in menu design in the presence of a consumer population with heterogeneous preferences and overload menu-size thresholds. The firms' strategic trade-off is between offering a large menu in order to match the preferences of as many consumers as possible, and offering a small menu in order to avoid losing choice-overloaded consumers to their rival or driving them out of the market altogether. We study the equilibrium outcomes in this market and establish some (im)possibility results and characterizations under a variety of assumptions. We also propose a measure of market effectiveness that may be thought of as a proxy for consumer welfare in this environment, and use it alongside our model to provide a critical perspective on regulations that cap the number of products that firms could offer.

A challenging issue in modern choice theory is how to enrich the kind of data available to the researcher along with our understanding of the decision-making process. We propose an axiomatic characterization of the 'satisficing' heuristic under various informational structures. In particular we examine the cases in which search behavior is both observable, partially observable, and unobservable. We also investigate behavioral definitions of preference and satisfaction and establish uniqueness results. Finally, we relate our framework to several well-known existing models.

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