Aspiration-based choice

Author(s)
Begum Guney, Michael Richter, Matan Tsur
Abstract

Numerous studies and experiments suggest that aspirations for desired but perhaps unavailable alternatives influence decisions. A common finding is that an unavailable aspiration steers agents to choose similar available alternatives. We propose and axiomatically characterize a choice theory consistent with this aspirational effect. Similarity is modeled using a subjective metric derived from choice data. This model offers implications for consumer welfare and its distribution between rich and poor when firms compete for aspirational agents, and a novel rationale for sales.

Organisation(s)
Department of Economics
External organisation(s)
Özyeğin University, University of London
Journal
Journal of Economic Theory
Volume
176
Pages
935-956
No. of pages
22
ISSN
0022-0531
DOI
https://doi.org/10.1016/j.jet.2018.05.003
Publication date
07-2018
Peer reviewed
Yes
Austrian Fields of Science 2012
Microeconomics
Keywords
ASJC Scopus subject areas
Portal url
https://ucris.univie.ac.at/portal/en/publications/aspirationbased-choice(94ecf984-0e3f-4924-a31b-69736e3b61e1).html