State dependent choice

Abstract

We propose a theory of choices that are influenced by the psychological state of the agent. The central hypothesis is that the psychological state controls the urgency of the attributes sought by the decision maker in the available alternatives. While state dependent choice is less restricted than rational choice, our model does have empirical content, expressed by simple 'revealed preference' type of constraints on observable choice data. We demonstrate the applicability of simple versions of the framework to economic contexts. We show in particular that it can explain widely researched anomalies in the labour supply of taxi drivers. JEL codes: D01. Keywords: Bounded rationality, procedural rationality, utility maximization, choice behavior. * This paper radically revises and supersedes a previous paper entitled 'Moody Choice'. We are grateful for helpful comments to two anonymous referees, the Editor in charge Clemens Puppe, Attila Ambrus, Sophie Bade, Nick Baigent, Vince Crawford, Stephan Dickert, Yorgos Gerasimou, Andreas Gloeckner, Steffen Huck, Silvia Milano, Mauro Papi, Daniel Sgroi, Chris Tyson, Lin Zhang as well as several seminar audiences. We've had numerous inspiring discussions with Michael Mandler on related topics. Financial support through ESRC grant RES-000-22-3474 is gratefully acknowledged.

Mixture Choice Data: Revealing Preferences and Cognition

“…These factors could include preferences as well as other cognitive variables such as the decision maker's level of attention (Masatlioglu et al [30]), mood or other affective state (Manzini and Mariotti [29]), or capacity to process information (Wilson [41]). 10 Whatever the interpretation of θ, our primary assumption is that the agent's choice behavior is statistically independent across menus, conditional on type.…”

A New Year, a New You? Heterogeneity and Self-Control in Food Purchases

“…Our work relates to several important literatures. Firstly, it relates to the literature on multiple-selves models, which dates back to Strotz (1955) and Peleg and Yaari (1973) and which remains very popular in the theoretical literature (see, e.g., Gul and Pesendorfer (2001), Kalai et al (2002), Gul and Pesendorfer (2004), Fudenberg and Levine (2006), Manzini and Mariotti (2007), de Clippel and Eliaz (2012), Manzini and Mariotti (2015), Ambrus and Rozen (2015) and Manzini and Mariotti (2016)). In this paper our aim is to study the choices that individu-als make and to consider what they can tell us about the extent of self-control problems.…”