Abstract: In this article, we discuss some aspects of Eliaz and Ok ’s (Games Econ Behav 56:61–86, 2006) choice theoretical foundations of incomplete preferences. Our aim is to clarify some aspects of their regularity condition for preorders, showing that, as far as rationalization of a choice correspondence alone is concerned, no further restriction is imposed by requiring the preorder to be regular. However, if one is also interested in capturing other observable aspects of the individual’s choice procedure, such as Eliaz and Ok’s notion of c-incomparability or the notion of behavioral indifference introduced in this paper, then the only option is to use a regular preorder. We also argue that their weak axiom of revealed non-inferiority (WARNI) is too strong a property if our aim is to characterize the rationalizability of a choice correspondence by a (possibly incomplete) preorder. Finally, as we have mentioned above, we introduce the notion of behavioral indifference and argue, not only that Eliaz and Ok’s notion of c-incomparability (observable incomparability) can be derived from it, but also that it has a wider range of applicability than their notion of observable incomparability. 

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Abstract: People often need to plan how to allocate their attention across different tasks. In this paper, we run two experiments to study a stylized version of this attention allocation problem between strategic tasks. More specifically, we present subjects with pairs of 2x2 games, and, for each pair, we give them 10 seconds to decide how they would split a fixed time budget between the two games. Then subjects play both games without time constraints, and we use eye-tracking to estimate the fraction of time they spend on each game. We find that subjects’ planned and actual attention allocation differ and identify the determinants of this mismatch. Further, we argue misallocations can be relevant in games where a player’s strategy choice is sensitive to the time taken to reach a decision.

Last update: 11/15/2022

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Abstract: This paper introduces a new approach to measure the incompatibility with rational choice, that is, with preference maximization. I start with two intuitive criteria to make comparative judgments of rationality and show that they lead to the same incomplete ranking of the rationality of choices, which has non-trivial implications for models of boundedly rational choice. I then propose a procedure to build indices that agree with this ranking and are tailored to specific applications. I showcase this procedure by proposing a new family of indices of incompatibility based on the Houtman-Maks index Houtman and Maks (1985).

Last update: 17/06/2024

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Abstract: Economists often rely on people’s choices to infer their preferences. However, inferring preferences from choices is problematic when people face unobserved constraints. In this paper, I study how to (cautiously) infer preferences from choices when the choices of the members of a social group are subject to a constraint that we only imperfectly know. When this happens, heterogeneity in the group’s choices and more information about the constraint help recover group members’ preferences, whereas homogeneity in choices hinders it. I further show that a well-known approach for choice-based welfare analysis makes misleading inferences about preferences and efficiency in this context.

Last update: 18/06/2024

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Abstract: We study how to design contracts to compete against a fixed baseline contract for people's time. To do so, we run an experiment where subjects are asked to choose one contract from several pairs of contracts and allocate time across contracts in the same pairs. Th contracts we consider pay either a high or a low payoff conditional on the agent's performance in a task and a stochastic event. Our experimental design is based on a simple model of how agents choose between and allocate time across these contracts. The model makes sharp predictions about the behavior of subjects in the experiment. We use our experimental results to test the model's prediction, derive lessons on how to effectively design contracts, and estimate how costly the model's mistakes can be. 

Abstract: Standard representations of choice ignore the order in which choices are made, although the order is informative and available.  In this paper, we introduce a representation that preserves this information. A sequential choice function maps sequences of menus to sequences of alternatives that belong to those menus. We propose methods to derive stochastic choice functions and choice correspondences from sequential choice functions and study under what conditions these methods are valid. We then discuss choice procedures that sequential choice functions can naturally represent, derive their induced stochastic choice functions and choice correspondences, and study what properties these objects satisfy.

Abstract: Richter (1966) characterizes when choices are compatible with the maximization of a complete preference relation if the collection of menus we observe is arbitrary. We tackle the same problem when preferences are incomplete. We use our characterization to construct an algorithm that recovers all incomplete preferences consistent with choices. We can then retrieve the rankings that hold regardless of the incomplete preference chosen to rationalize choices. When the set of alternatives is infinite, an example shows that contrary to what happens in the case preferences are complete, refuting the incomplete preference model can require we observe an infinite number of menus.