A simple satisficing model

Economic theory is built on the assumption that people are omniscient utility maximizers. In reality, this is unlikely to be true and often people lack information about all alternatives that are available to them; either because the information is unavailable or that the cost of searching for and evaluating that information is high. In this paper, we develop a simple and tractable model that captures satisficing behavior. We show that the model can retrieve consistent parameters under a large range of experimental conditions. We test our model on synthetic data and present an empirical application. We discuss the implications of our results for the use of satisficing choice models in explaining choice.

Automated summary

This paper develops a simple and tractable model to capture satisficing behavior and examines its implications for explaining choice. The model retrieves consistent parameters under a wide range of experimental conditions and is tested on synthetic data. The results suggest the potential use of satisficing choice models in understanding decision-making under incomplete information.