A Characterization of Sequential Rationalizability

• Authors: Jose Apesteguia.
• BSE Working Paper: 112297 | September 15
• Keywords: consistency , bounded rationality , individual rationality , Rationalizability , behavioral economics , Voting.
• JEL codes: B41, D01
• consistency
• bounded rationality
• individual rationality
• Rationalizability
• behavioral economics
• Voting.

A choice function is sequentially rationalizable if there is an ordered collection of asymmetric binary relations that identifies the selected alternative in every choice problem. We propose a property, F-consistency, and show that it characterizes the notion of sequential rationalizability. F-consistency is a testable property that highlights the behavioral aspects implicit in sequentially rationalizable choice. Further, our characterization result provides a novel tool with which to study how other behavioral concepts are related to sequential rationalizability, and establish a priori unexpected implications. In particular, we show that the concept of rationalizability by game trees, which, in principle, had little to do with sequential rationalizability, is a refinement of the latter. Every choice function that is rationalizable by a game tree is also sequentially rationalizable. Finally, we show that some prominent voting mechanisms are also sequentially rationalizable.