CIRJE-F-1082 "Dissatisficing-Averse Preferences"
Author Name Hashidate, Yosuke
Date April 2018
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Abstract

This paper axiomatically characterizes a model of attribute-based inferences in which, to make a choice, a decision maker determines the optimal weight on a given attribute space. To study how the decision maker aggregates attribute-based information of options, this paper takes the framework of preferences over menus, and introduces plausible new axioms for attribute-based inferences. By requiring that the decision maker dislikes increasing the trade-off between attributes, the key axioms characterize a dissatisficing-averse utility (DAU) representation, in which the decision maker determines the optimal weight on the objective attribute space by minimizing the deviation from each (menu-dependent) attribute-best option. Moreover, to study the resulting behaviors, this paper considers a pair of (i) preferences over menus and (ii) choice correspondences, to provide a behavioral foundation for the ex-post choices of DAU. By studying choices from menus explicitly, i.e., considering a relationship between menu-preferences and choices, this paper verifies that DAU allows for the Compromise Effect, which is a well-known preference reversal.