Towards Formalizing the Observed Behavior of Choice

Mousavi, Shabnam; Kheirandish, Reza (2008). "Towards Formalizing the Observed Behavior of Choice," Proceedings of the Southeast Decision Science Institute, SEDSCI 2008.

 Abstract: Formulating the problem of compound lotteries, which marks the origination of expected utility theory (EUT), has generated a stream of formal work in the field of economics decision making.  Where subjective EUT determines the rational choice, exploring the process of choice and observed use of heuristics fall into the domain of bounded rationality. We review an axiomatization of bounded rationality, introduce a phenomenon that it cannot account for, and juxtapose two process models based on similarity for compound lotteries. We argue that an alternative framework based on an underemployed philosophical theory of inquiry promises more fruitful approach to theorizing choice.

Source: SEDSCI