Satisficing and stochastic choice

Abstract

Satiscing is a hugely inuential model of boundedly rational choice, yet it cannot be easily tested using standard choice data. We develop necessary and sucient conditions for stochastic choice data to be consistent with satiscing, assuming that preferences are xed, but search order may change randomly. The model predicts that stochastic choice can only occur amongst elements that are always chosen, while all other choices must be consistent with standard utility maximization. Adding the assumption that the probability distribution over search orders is the same for all choice sets makes the satiscing model a subset of the class of random utility models.

Visual judgments of length in the economics laboratory: Are there brains in stochastic choice?

“…In this sense, counting could be considered an objective measure of value. Because the line pixels in our experiment cardi, and Dean (2016), Caplin, Dean, and Leahy (2019), and Cattaneo et al (2020. 1 0 For example, see Caplin (2016) for an overview.…”

Stochastic Complementarity

“…The authority may also be surprised to hear that the gold standard concept of Hicksian complementarity is embedded in a rational utility maximisation framework. 1 1 It merits noting in this respect that goverments are more and more exposed to the idea that citizens are not necessarily fully rational utility maximisers. They are increasingly being advised by 'behavioural economics' units.…”

“…However, the recent wave of abstract works on stochastic choice (e.g. Aguiar, Boccardi and Dean [1], Brady and Rehbeck [10], Caplin and Dean [12], Echenique, Saito and Tserenjigmid [16], Gül, Natenzon and Pesendorfer [18], Manzini and Mariotti [20] among others) has highlighted a wide variety of possible 'choice errors' and choice procedures, and so a number of reasons why agents' behaviour might fail to be described by a logit model, and indeed even by the much larger class of RUMs. We take Behavioural Insights Unit established in 2012 as part of the New South Wales Premier and Cabinet's office.…”

“…In the logit model, we assume that each bundle σ 2 fxy, x, y, ?g has a 'systematic utility' u : fxy, x, y, ?g ! R ++ , and that σ is chosen with logit probability, namely p (u,λ) logit (σ) = e u σ /λ ∑ τ2fxy,x,y,?g e u τ /λ (1) where λ > 0 is a scaling factor (measuring the variance of the underlying Gumbel errors, see McFadden [21]). In this specification, purely random behaviour (i.e.…”

Effects of Users’ Bounded Rationality on a Traffic Network Performance: A Simulation Study

“…On the other hand, users may also have an indifferent preference for any of the satisficing routes (i.e., that satisfy (1)). This is adopted from the notions discussed in [32]. In this case, we consider the fact that all users sharing the same od pair have a similar indifference preference.…”