Procedurally Justifiable Strategies : Integrating Context Effects into Multistage Decision Making
(2024) In Review of Behavioral Economics 11(3). p.313-347- Abstract
This paper proposes a simple framework to model contextual influences on procedural decision making. In terms of utility, we differentiate between monetary payoffs and contextual psychological ones, e.g. deriving from the subjects’ normative frame of reference. Monetary payoffs are treated as common knowledge while psychological payoffs are treated as partly unforeseeable. Regarding behaviour, we assume that players act optimal given their local perception of the game. As perceptions may be incorrect, we do not consider common equilibrium conditions but instead require strategies to be procedurally justifiable. As we argue, various common inconsistencies considered in behavioural economics can be understood as procedurally justifiable... (More)
This paper proposes a simple framework to model contextual influences on procedural decision making. In terms of utility, we differentiate between monetary payoffs and contextual psychological ones, e.g. deriving from the subjects’ normative frame of reference. Monetary payoffs are treated as common knowledge while psychological payoffs are treated as partly unforeseeable. Regarding behaviour, we assume that players act optimal given their local perception of the game. As perceptions may be incorrect, we do not consider common equilibrium conditions but instead require strategies to be procedurally justifiable. As we argue, various common inconsistencies considered in behavioural economics can be understood as procedurally justifiable behaviour.
(Less)
- author
- Kemper, Fynn and Wichardt, Philipp C. LU
- organization
- publishing date
- 2024-07
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Behavioural inconsistencies, context effects, limited foresight, procedural decision making, utility
- in
- Review of Behavioral Economics
- volume
- 11
- issue
- 3
- pages
- 35 pages
- publisher
- Now Publishers Inc
- external identifiers
-
- scopus:85198641348
- ISSN
- 2326-6198
- DOI
- 10.1561/105.00000192
- language
- English
- LU publication?
- yes
- id
- 6359d4af-dc46-45e3-8a3c-8e0602c8800d
- date added to LUP
- 2024-09-23 14:09:20
- date last changed
- 2024-09-23 14:10:02
@article{6359d4af-dc46-45e3-8a3c-8e0602c8800d,
abstract = {{<p>This paper proposes a simple framework to model contextual influences on procedural decision making. In terms of utility, we differentiate between monetary payoffs and contextual psychological ones, e.g. deriving from the subjects’ normative frame of reference. Monetary payoffs are treated as common knowledge while psychological payoffs are treated as partly unforeseeable. Regarding behaviour, we assume that players act optimal given their local perception of the game. As perceptions may be incorrect, we do not consider common equilibrium conditions but instead require strategies to be procedurally justifiable. As we argue, various common inconsistencies considered in behavioural economics can be understood as procedurally justifiable behaviour.</p>}},
author = {{Kemper, Fynn and Wichardt, Philipp C.}},
issn = {{2326-6198}},
keywords = {{Behavioural inconsistencies; context effects; limited foresight; procedural decision making; utility}},
language = {{eng}},
number = {{3}},
pages = {{313--347}},
publisher = {{Now Publishers Inc}},
series = {{Review of Behavioral Economics}},
title = {{Procedurally Justifiable Strategies : Integrating Context Effects into Multistage Decision Making}},
url = {{http://dx.doi.org/10.1561/105.00000192}},
doi = {{10.1561/105.00000192}},
volume = {{11}},
year = {{2024}},
}