Satisficing and maximizing consumers in a monopolistic screening model

Mauro Papi

doi:10.1016/j.mathsocsci.2013.08.005

Satisficing and maximizing consumers in a monopolistic screening model

Mauro Papi

Economics

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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 language	English
Pages (from-to)	385-389
Number of pages	5
Journal	Mathematical Social Sciences
Volume	66
Issue number	3
Early online date	31 Aug 2013
DOIs	https://doi.org/10.1016/j.mathsocsci.2013.08.005
Publication status	Published - Nov 2013

Bibliographical note

This paper is based on a chapter of my Ph.D. dissertation. I would like to thank Jose Apesteguia, Daniel Danau, Seong-Hoon Kim, Paola Manzini, Ricardo Alberto Marques Pereira, and my supervisors, Marco Mariotti and Luigi Mittone, for their helpful comments. I am also grateful to the editor, the associated editor, and two referees. Any error is my own responsibility.

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© 2013. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
Accepted author manuscript, 194 KBLicence: CC BY-NC-ND

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AB - 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.

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JF - Mathematical Social Sciences

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ER -

Satisficing and maximizing consumers in a monopolistic screening model

Abstract

Bibliographical note

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