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CRIEFF Discussion Paper Number 1002

Moody choice

Paola Manzini (University of St. Andrews) and Marco Mariotti (University of St. Andrews)

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Abstract

If choices depend on the decision maker’s mood, is the attempt to derive any consistency in choice doomed? In this paper we argue that, even with full unpredictability of mood, the way choices from a menu relate to choices from another menu exhibits some structure. We present two alternative models of moody choice. and show that, in either of them, not all choice patterns are possible. Indeed, we characterise both models in terms of consistency requirements of the observed choice data.

JEL codes: D01
Keywords: Financial Bounded rationality, procedural rationality, utility maximization, choice behavior

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