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- Title
Anticipated stochastic choice.
- Authors
Koida, Nobuo
- Abstract
The purpose of this study is to characterize stochastic choice influenced by the objective or subjective <italic>positions</italic> of alternatives in a menu. The main theorem axiomatizes the <italic>anticipated stochastic choice</italic> (ASC) representation, wherein the decision maker maximizes the expected utility by the <italic>cognitive control</italic> of a probability measure over <italic>mental states</italic> that trigger the ex post choice of alternatives. A key prerequisite for this axiomatization is that the randomization between menus is identified with their <italic>perfectly correlated mixture</italic>, which includes only mixtures of specific alternative pairs. The essential uniqueness of an ASC representation defines an index of rationality that is relevant to a preference for commitment. Special cases of ASC include exact utility maximization, uncontrolled stochastic choice, trembling hands, and choice with limited attention. Furthermore, ASC accommodates potentially stochastic choice anomalies such as the attraction effect, cyclical choice, and position effects.
- Subjects
STOCHASTIC analysis; STOCHASTIC processes; RANDOMIZATION (Statistics); DECISION making; COGNITION
- Publication
Economic Theory, 2018, Vol 65, Issue 3, p545
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s00199-016-1025-9