On randomized rationality

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Abstract

In contrast to the traditional notion of rationalizability of stochastic choice which requires the preference relations to be strict, we propose a notion of rationalizability without requiring the preference relations to be strict. Our definition is based on the simple hypothesis of a two-stage choice process: stage (i) a preference relation R is drawn according to a probability assignment; stage (ii) an alternative is picked from each feasible set according to a uniform lottery over the R-greatest set in it. We provide a necessary and sufficient condition for rationalizability of stochastic choice. Since our framework is general enough to subsume the traditional case, our result also provides an alternative characterization of the traditional notion of rationalizability. We also show the equivalence between the two notions of rationalizability in a specific case.
Original languageEnglish
Pages (from-to)633-641
Number of pages9
JournalSocial Choice and Welfare
Volume37
Issue number4
DOIs
Publication statusPublished - Oct 2011

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