Aspiration traps

Abstract

Fundamental non-recurrent choices, like location or education, affect the attitudes and beliefs with which the individual consequently analyzes day-to-day decision problems. These effects cannot be assumed to be transparent to the individual. To restore methodological discipline in the analysis of such choices, we propose a solution concept based on an idea of self-justification and consistency: the individual should not regret her fundamental choice after her preferences and beliefs regarding day-to-day decisions have adjusted thereof. We show that even single-person fundamental choice problems admit multiple, Pareto-ranked solutions: the individual might be stuck in an aspiration trap.