Dietrich, Franz and List, Christian
The London School of Economics and Political Science, Suntory and Toyota International Centres for Economics and Related Disciplines, London, UK.
“Reason-based rationalizations” explain an agent's choices by specifying which properties of the options or choice context he/she cares about (the “motivationally salient properties”) and how he/she cares about these properties the “fundamental preference relation”). We characterize the choice-behavioural implications of reason-based rationalizability and identify two kinds of context-dependent motivation in a reason-based agent: he/she may (i) care about different properties in different contexts and (ii) care not only about properties of the options, but also about properties relating to the context. Reason-based rationalizations can explain non-classical choice behaviour, including boundedly rational and sophisticated rational behaviour, and predict choices in unobserved contexts, an issue neglected in standard choice theory.
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