Extending the Bounds of Rationality: Evidence and Theories of Preferential Choice
Jerome R. Busemeyer, and
Barbara A. Mellers. 2006. "Extending the Bounds of Rationality: Evidence and Theories of Preferential Choice."
Journal of Economic Literature,
Most economists define rationality in terms of consistency principles. These principles
place ?bounds? on rationality?bounds that range from perfect consistency to weak
stochastic transitivity. Several decades of research on preferential choice has demonstrated
how and when people violate these bounds. Many of these violations are interconnected
and reflect systematic behavioral principles. We discuss the robustness of
the violations and review the theories that are able to predict them. We further discuss
the adaptive functions of the violations. From this perspective, choices do more than
reveal preferences; they also reflect subtle, yet often quite reasonable, dependencies on
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Busemeyer, Jerome R.
Mellers, Barbara A.