COWLES FOUNDATION FOR RESEARCH IN
ECONOMICS Box 208281
COWLES FOUNDATION DISCUSSION PAPER NO. 1670
Attila Ambrus and Kareen Rozen July 2008 This paper studies a class of multi-self decision-making models proposed in economics,
psychology, and marketing. In this class, choices arise from the set-dependent aggregation
of a collection of utility functions, where the aggregation procedure satisfies some
simple properties. We propose a method for characterizing the extent of irrationality in a
choice behavior, and use this measure to provide a lower bound on the set of choice
behaviors that can be rationalized with n utility functions. Under an additional
assumption (scale-invariance), we show that generically at most five "reasons"
are needed for every "mistake." |
