Abstract
Decision makers often stick to a status quo without explicitly reconsidering it. Yet, their observed choices might be compatible with a fully rational model. We ask when such a rationalization is possible. We assume as observable only the choice of sticking to the status quo vs. changing it, as a function of a database of cases. We state conditions on the set of databases that would make the decision maker change the status quo, which are equivalent to the following representation: the decision maker entertains a set of theories, of which one is that her current choice is the best; she is inert as long as that theory beats any alternative theory according to a maximum likelihood criterion.
Original language | English |
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Pages (from-to) | 289-308 |
Number of pages | 20 |
Journal | Journal of Economic Theory |
Volume | 181 |
DOIs | |
State | Published - May 2019 |
Keywords
- Case-based decisions
- Inertia
- Status quo
- System 1
- System 2
All Science Journal Classification (ASJC) codes
- Economics and Econometrics