arXiv subjects

Georgios Gerasimou

Publications and source records attributed to Georgios Gerasimou.

7 recordsLinked to original sources

arXiv2026

Distilling Models of Bounded-Rational Choice: A Constraint Programming Approach

We provide an analytical framework that allows for distilling the full explanatory and welfare-relevant content of influential yet computationally hard models of bounded-rational general choice. We do so by introducing constraint programming methods and tools from the optimization literature. We focus on the prominent "shortlisting" and "limited-attention" models. Applying our framework on imperfectly rational human choice data, we find that these models jointly account for nearly all behaviors, with limited-attention ones explaining better while being more permissive. Selection criteria that we introduce narrow down the models' welfare-relevant predictions, considerably alleviating their indeterminacy and contributing toward their practical applicability.

econ.TH↗

arXiv2024

Convergence to Utility Maximization and the Indifference Hypothesis

We ask if participants in a choice experiment with repeated presentation of the same menus and no feedback provision: (i) exhibit overall behaviour that is consistent with ordinal and expected utility theory under *weak* preferences; (ii) become more consistent with the predictions of these theories under *strict* preferences.To answer these questions we designed and implemented a free-choice lab experiment with 15 distinct menus. Each menu contained two, three and four lotteries with three monetary outcomes, and was shown five times. Subjects could avoid/defer making active choices at a positive expected cost. Among our 308 subjects from the UK and Germany, significantly more were compatible with ordinal and expected utility maximization in their last 15 than in their first 15 identical decision problems. Around a quarter and a fifth of all subjects, moreover, were compatible with those modes *throughout* the experiment, with nearly half of these under weak preferences. Choice consistency is positively correlated with cognitive ability, and subjects who converged to utility-maximizing behaviour were more cognitively able than those who did not. We discuss potential implications of our study's novel set of findings.

econ.GN↗

arXiv2023

Non-diversified portfolios with subjective expected utility

Diversification is the typical investment strategy of risk-averse agents. However, non-diversified positions that allocate all resources to a single asset, state of the world or revenue stream are common too. We show that whenever finitely many non-diversified demands under uncertainty are compatible with risk-averse subjective expected utility maximization under strictly positive beliefs, they are also rationalizable under the same beliefs by many qualitatively distinct risk-averse as well as risk-neutral and risk-seeking preferences.

econ.TH↗

arXiv2021

Eliciting and Distinguishing Between Weak and Incomplete Preferences: Theory, Experiment and Computation

Recovering and distinguishing between the strict-preference, indifference and/or indecisiveness parts of a decision maker's preferences is a challenging task but also important for testing theory and conducting welfare analysis. This paper contributes towards this goal by reporting on data from a lab experiment on riskless choice that were analyzed with novel theory-guided computational methods. The experiment included both Forced- and Free-Choice treatments. Its main novelty consisted of allowing subjects to select multiple alternatives at each menu. Based on a new non-parametric goodness-of-fit criterion that we introduce, which generalizes a widely used pre-existing method to environments of multi-valued choices, each subject's decisions were tested against three structured general choice models that feature maximization of stable but potentially weak and/or incomplete preferences. Nearly 60% of all subjects' are well-explained by one of these models, typically with a unique model-optimal preference relation per subject. Importantly, revealed preferences typically have a non-trivial indifference part that, on average, accounts for up to 19% of all possible comparisons. In addition, 22% of all subjects are best explained by models of incomplete-preference maximization and reveal preferences that typically exhibit the distinctions between indifference and indecisiveness that these models afford or predict. These distinctions are documented empirically for the first time.

econ.TH↗

arXiv2021

Status Quo Bias and the Decoy Effect: A Comparative Analysis in Choice under Risk

Inertia and context-dependent choice effects are well-studied classes of behavioural phenomena. While much is known about these effects in isolation, little is known about whether one of them "dominates" the other when both can potentially be present. Knowledge of any such dominance is relevant for effective choice architecture and descriptive modelling. We initiate this empirical investigation with a between-subjects lab experiment in which each subject made a single decision over two or three money lotteries. Our experiment was designed to test for dominance between *status quo bias* and the *decoy effect*. We find strong evidence for status quo bias and no evidence for the decoy effect. We also find that status quo bias can be powerful enough so that, at the aggregate level, a fraction of subjects switch from being risk-averse to being risk-seeking. Survey evidence suggests that this is due to subjects focusing on the maximum possible amount when the risky lottery is the default and on the highest probability of winning the biggest possible reward when there is no default. The observed reversal in risk attitudes is explainable by a large class of Koszegi-Rabin (2006) reference-dependent preferences.

econ.GN↗

arXiv2020

Efficient allocation with ordinal preference intensities

Standard allocation methods that rely on ordinal preferences ignore how strongly agents value different improvements. On the other hand, methods based on cardinal utilities require assumptions that are often considered too demanding. This paper studies the classic one-to-one assignment problem in the middle-ground environment of *ordinal* preference intensities: agents rank alternatives as well as preference improvements, without necessarily being able to quantify these comparisons. The paper introduces an interpersonal comparability assumption for this novel social-choice analytical setting. Building on it, it proposes and analyses the *intensity-efficiency* criterion. This refines Pareto's criterion by discarding any allocation that is worse than another according to an intuitive intensity-dominance relation. The feasibility and applicability of this framework in matching problems is illustrated with two quadratic-time algorithms which, respectively, elicit ordinal intensity rankings and extend the classic Random Priority mechanism in a welfare-improving direction.

econ.TH↗

arXiv2020

Decision Conflict, Power Logit, and the Deferral Outside Option

Decision makers often opt for the deferral outside option when they find it difficult to make an active choice. Contrary to existing logit models with an outside option where the latter is assigned a fixed value exogenously, this paper introduces and studies a class of logit models where that option's value is menu-dependent, may be determined endogenously, and could be interpreted as proxying the varying degree of decision difficulty at different menus. We focus on the *power logit* special class of these models. We show that these explain some observed choice-deferral effects that are caused by hard decisions, including non-monotonic "roller-coaster" choice-overload phenomena that are regulated by the presence or absence of a clearly dominant feasible alternative. We illustrate the usability, novel insights and explanatory gains of the proposed framework for duopolistic modelling and empirical discrete choice analysis.

econ.TH↗