Sequentially Rationalizable Choice With Transitive Rationales

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Executive Summary

In this paper, the authors analyze a sequentially rationalizable choice model with a transitive rationale and a standard preference. The model in this note is more restrictive than the Rational Shortlist Method (RSM) model which is proposed in Manzini and Mariotti (2007) to capture cyclic behavior. Yet, a decision maker in the model exhibits cyclic behavior in general. They prove that the cyclicity of an indirectly revealed preference is exactly what distinguishes the RSM framework (a sequential choice model with a non-standard preference) from the transitive-RSM framework (a sequential choice model with a standard preference). They also provide a partial identification result on the representation.

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