Choice By Sequential Procedures

• Authors: Jose Apesteguia.
• BSE Working Paper: 110103 | September 15
• Keywords: bounded rationality , individual rationality , behavioral economics
• JEL codes: D01
• bounded rationality
• individual rationality
• behavioral economics

We propose a rule of decision-making, the sequential procedure guided by routes, and show that three influential boundedly rational choice models can be equivalently understood as special cases of this rule. In addition, the sequential procedure guided by routes is instrumental in showing that the three models are intimately related. We show that choice with a status-quo bias is a refinement of rationalizability by game trees, which, in turn, is also a refinement of sequential rationalizability. Thus, we provide a sharp taxonomy of these choice models, and show that they all can be understood as choice by sequential procedures.