Choice Sets as Percepts

Abstract

This chapter highlights the potential value of research that integrates information concerning how choice sets are perceived into the utility-maximizing framework. The economic concept is utility maximization, which characterizes what a decision-maker (DM) selects from an available set of choices. One advantage of choice process data over less familiar forms of data is that it comes in the standard form of choices and hence is readily modeled using traditional tools of the trade, in particular, the theory of constrained optimization. The DM is assumed to start with imperfect information on how the options compare, which information gets successively refined as the choice is considered for longer and longer periods of time. Search theory is designed for choice among many options, each of which is simple. While new measurements are vital, they are not sufficient to make the proposed research thrive. In fact, non-standard data raises deep theoretical challenges. There must be conceptual innovation in formulating how various choice environments impact the generation of percepts.