This award funds work in economic theory that incorporates ideas from psychology into a formal model of how individuals make decisions. In this model, a decisionmaker must make a choice from a group of alternatives. She first selects alternatives she can explain or justify. From this smaller group, he or she then chooses the alternative that best satisfies her individual tastes, preferences, or goals. This theory predicts that rationalizability will play an important role in economic decisionmaking.
The PIs show how this theory of of individual decision making can be tested through observing real-world choices. They also examine outcomes in strategic environments when this rationlizability concept is added to standard Nash equilibrium arguments. Finally, they intend to conduct a number of laboratory experiments to test their ideas, including experiments on how rationalizability affects rational voting behavior.
This research has interdisciplinary implications for economics, decision science, psychology, and political science.
