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Sequentially Rationalizable Choice with Transitive Rationales

Au, Pak Hung and Kawai, Keiichi (2011): Sequentially Rationalizable Choice with Transitive Rationales. Forthcoming in: Games and Economic Behavior

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Abstract

In this note, we analyze a sequentially rationalizable choice model with a transitive rationale and a standard preference. The model in this note is more restrictive than the Rational Shortlist Method (RSM) model which is proposed in Manzini and Mariotti (2007) to capture cyclic behavior. Yet, a decision maker in our model exhibits cyclic behavior in general. We prove that the cyclicity of an indirectly revealed preference is exactly what distinguishes the RSM framework (a sequential choice model with a non-standard preference) from our transitive-RSM framework (a sequential choice model with a standard preference). We also provide a partial identification result on the representation.

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