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  3. American Economic Journal: Microeconomics
  4. May 2021
  5. Exponential Satisficing

American Economic Journal:
Microeconomics

ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)

Exponential Satisficing

  • Christopher J. Tyson
American Economic Journal: Microeconomics
vol. 13, no. 2, May 2021
(pp. 439–67)
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Abstract

We propose the exponential satisficing model of boundedly rational decision-making, a general-purpose tool designed for use in typical microeconomic applications. The model posits that the preferences perceived and acted upon by the agent are a stochastic coarsening of his or her true, welfare-significant preferences. The decision-maker's perceptual capabilities are controlled by a preference resolution parameter, which smoothly varies the impact of cognitive constraints on choice. To demonstrate the implementation of the model, it is applied to duopolistic price competition with satisficing consumers and to normal-form games with satisficing players.

Citation

Tyson, Christopher J. 2021. "Exponential Satisficing." American Economic Journal: Microeconomics, 13 (2): 439–67. DOI: 10.1257/mic.20180301

Additional Materials

JEL Classification

  • D01 Microeconomic Behavior: Underlying Principles
  • D80 Information, Knowledge, and Uncertainty: General
  • D90 Micro-Based Behavioral Economics: General
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