Alfio Giarlotta

This note in the Milestones series is dedicated to the paper “A Behavioral Model of Rational Choice”, written by Herbert Simon and published in 1955 on the Quarterly Journal of Economics.

An extensive choice over X is a function assigning to any subset S of X a possibly empty subset of S. Klamler (Soc Choice Welf 30:419–425, 2008) shows that the operation of symmetric difference induces a metric on the family of extensive choices over X, and this metric is characterized by five axioms –. We provide counterexamples to Klamler’s result, suggest a slight modification of axioms and to obtain a correct characterization, and finally observe that axiom is redundant.

We describe a context-sensitive model of choice, in which the selection process is shaped not only by the attractiveness of items but also by their semantics ('salience'). All items are ranked according to a relation of salience, and a linear order is associated to each item. The selection of a single element from a menu is justified by one of the linear orders indexed by the most salient items in the menu. The general model provides a structured explanation for any observed behavior, and allows us to to model the 'moodiness' of a decision maker, which is typical of choices requiring as many distinct rationales as items. Asymptotically all choices are moody. We single out a model of linear salience, in which the salience order is transitive and complete, and characterize it by a behavioral property, called WARP(S). Choices rationalizable by linear salience can only exhibit non-conflicting violations of WARP. We also provide numerical estimates, which show the high selectivity of this testable model of bounded rationality.

We describe a context-sensitive model of choice, in which the selection process is shaped not only by the attractiveness of items but also by their semantics (‘salience’). Items are ranked according to a binary relation of salience, and a linear order is associated to each item. The selection of a unique element from a menu is justified by one of the linear orders associated to the most salient items in the menu. The general model provides a structured explanation for any behavior, and allows us to model a notion of ‘moodiness’ of the decision maker, typical of choices requiring as many distinct rationales as items. Asymptotically, all choices are moody. We single out a model of linear salience, in which the order encoding semantics is transitive and complete. Choices rationalizable by linear salience can only exhibit non-conflicting violations of WARP. Numerical estimates show the sharp selectivity of this testable model.

We describe a process to compose and decompose choice behavior, called resolution. In the forward direction, resolutions amalgamate simple choices to create a complex one. In the backward direction, resolutions detect when and how a primitive choice can be deconstructed into smaller choices. A choice is resolvable if it is the resolution of smaller choices. Rationalizability, rationalizability by a preorder, and path independence are all preserved (backward and forward) by resolutions, whereas rationalizability by a weak order (equivalently, ) is not. We characterize resolvable choices, and show that resolvability generalizes .