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Seminar: 3/2 - Craig Mckenzie, UCSD

11:00 to 12:30 PM      at:  5101 Tolman Hall

Rational violations of rational norms

Experiments in decision making have revealed systematic violations of coherence principles derived from rational choice theory. However, the normative validity of these principles rests on implicit assumptions about the information structure of the environment. When prior knowledge of the stimulus universe is limited, the presentation of each option alters the information state in which other options are evaluated. We show how such inferences from options may lead to "rational violations of rational norms". In a series of novel choice problems, hypothetical rational actors are shown to violate joint-separate equivalence, regularity, and even transitivity. We apply this framework to an influential phenomenon from the decision making literature - joint-separate reversals traditionally explained by the evaluability hypothesis. An options-as-information model entails that standard joint-separate reversals are not irrational; in fact, they are not even preference reversals. Three experiments provide evidence for the descriptive validity of the normative model. Finally, we discuss rational norms as "aspirational heuristics", which have a limited range of application.