Satisficing and maximizing consumers in a monopolistic screening model

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Abstract

We study a simple model in which a monopolist supplies a multi-attribute good and
does not know whether the consumer is an expected-utility maximizer or a boundedly rational type that follows the satisficing heuristic proposed by Herbert Simon. We find that unless the probability of the consumer being fully rational is sufficiently high, the fact that the boundedly rational consumer never exchanges satisfactory with unsatisfactory alternatives implies that she never ends up with an alternative strictly better than her aspiration levels.
Original languageEnglish
Pages (from-to)385-389
Number of pages5
JournalMathematical Social Sciences
Volume66
Issue number3
Early online date31 Aug 2013
DOIs
Publication statusPublished - Nov 2013

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