In decision-making involving multiple criteria or attributes, the attributes are often divided into core and non-core attributes. A dominance principle is formulated in terms of core attributes, and this principle is applied whenever it is applicable. If, however, the dominance principle defined in terms of core attributes is not applicable, then non-core attributes are consulted in comparing o...

Motivated by real life decision problems, we model a boundedly rational choice procedure, called choice by iterative elimination, where an alternative might not be compared by all available alternatives. Our decision maker continues her limited search until she finds an alternative which is optimal within its consideration set. We study properties of this procure and provide a full characteriza...

We examine the maximal-element rationalizability of choice functions with arbitrary domains. While rationality formulated in terms of the choice of greatest elements according to a rationalizing relation has been analyzed relatively thoroughly in the earlier literature, this is not the case for maximal-element rationalizability, except when it coincides with greatest-element rationalizability b...

The Working Papers should not be reported as representing the views of the Banco Central do Brasil. The views expressed in the papers are those of the author(s) and do not necessarily reflect those of the Banco Central do Brasil. This paper characterizes ambiguity averse preferences in the absence of the completeness axiom. We axiomatize multiple selves versions of some of the most important ex...

The Measurement of Child Costs: Evidence from Ireland We apply an extension of the Rothbarth approach to estimate the share of household resources accruing to children (i.e., the cost of children) in Ireland. The method also allows us to identify the economies of scale in the household and indifference scales in Lewbel (2003)’s sense. A practical aspect of the present approach is that it does n...

Game theory traditionally specifies players’ numerical payoff functions. Following the concept of utility invariance in modern social choice theory, this paper explores what is implied by specifying equivalence classes of utility function profiles instead. Within a single game, utility transformations that depend on other players’ strategies preserve players’ preferences over their own strategi...

This paper suggests a cognitive basis for the isomorphism of a utility function and a distribution function. With only a minimal set of cognitive tools ordinal comparison and frequency processing an object can be evaluated by its relative position in a reference set. This cognitive evaluation, coupled with “more is better” preferences, is consistent with possession of a cardinal utility functio...

Integrated assessment models lack a microeconomic foundation in modelling environmental damages to the economy. To overcome this, damage coefficients are incorporated in standard microeconomic models. Firms and consumers take both damages and prices as given. Demand, supply, profit and expenditure functions under damage coefficients are derived that allow easy implementation in applied economic...

In important situations, individual decision-making is systematically biased. When deciding (rather than consuming), extrinsic attributes of choice options are more salient than intrinsic attributes. People overestimate extrinsic attributes and therefore put too much effort into acquiring income and gaining status, lowering their utility level. These mistakes are accentuated in authoritarian sy...