Rational stability of choice functions |
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Authors: | Josep E Peris Begoña Subiza |
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Institution: | Mètodes Quantitatius i Teoria Econòmica and IUDESP, Universitat d'Alacant, Alacant, Spain |
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Abstract: | Two independent approaches have been used to analyze choices. A prominent notion is rationalizability: individuals choose maximizing binary relations. An alternative is to analyze choices in terms of standards of behavior with the notion of von Neumann–Morgenstern (vNM)-stability. We introduce a new concept (stability) that in turn extends the notion of stability and rationality. Our main result establishes that every rationalizable choice function is stable and every vNM-stable choice has an stable selection. An appealing property of stability is that well-known solution concepts (top cycle, uncovered set, …) are stable, while they are neither rationalizable nor vNM-stable. |
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Keywords: | binary choice rationalizable choice stable set |
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