In the lecture we said that a choice function can be rationalized as resulting f

Question

In the lecture we said that a choice function can be rationalized as resulting from utility maximization if and only if it satisfies conditions and . However, there are also other choice procedures that will satisfy conditions and and so are indistinguishable from rational choice. Consider the following decision making procedures. In each case argue whether or not they will result in choices that satisfy conditions and . If it does, explain why. If it doesn’t give a counterexample.

(a) A decision maker (DM) assigns a distinct utility number to each alternative and chooses the alternative with the lowest utility.

(b) The DM ranks the alternatives according to a utility function, and in any choice set, she chooses the element that has the median number.

(c) A DM is choosing between books. The DM has a utility function u, and an aspiration utility level a. In any choice set, the DM searches through the books alphabetically by title and chooses the first book that has utility level u that is equal to or above a. If they have not found any such book by the time they reach the end of the choice set, the DM will choose the last book.

Explanation / Answer

A NO. First arbitrary values are not rational. He will assign other values next time. E. G he will assign maximum values to them next time

B no median value can't maximise utility. Highest possible number can given costs. E. G he can choose a which give 10utils over B which gives only 5 utils

C it will satisfy since utility is equal to or greater than a*

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