Bounded Rationality in Choice Conference 2015

Sunday, May 31st & Monday, June 1st, 2015

Location: NYU Stern School of Business
Kaufman Management Center Room 1-70
44 West 4th Street, NY 10012

@NYU Photo Bureau: Handelman

On May 31 – June 1 2015, NYU hosted the 3nd Conference on Bounded Rationality in Choice. The conference was generously funded by the C.V. Starr Center for Applied Economics. The program committee comprised Professors Jose Apesteguia (Pompeu Fabra), Miguel Ballester (Universitat Autònoma de Barcelona), Andrew Caplin (New York University), Xavier Gabaix (New York University), Marco Mariotti (Queen Mary’s University, London), Paola Manzini (St. Andrews University), Efe Ok (New York University), and Ariel Rubinstein (Tel Aviv and New York Universities). The conference brought together researchers in decision theory, experimental economics, and behavioral economics who are interested in how bounds on rationality play out in decisions, games, and at the equilibrium level in a macroeconomic context. The conference followed up on a successful earlier workshops at St. Andrew’s University in June of 2013 and in Barcelona in June of 2014.

There were two full days of talks, with ten talks on the first day and eight on the second. In addition there were three separate discussion sessions, moderated by Andrew Caplin, in which various different viewpoints on the how this body of work should evolve were presented. These sessions were extremely lively, and highlighted the unusually high level of engagement that was seeded by the presence of leading representatives of behavioral economics (e.g. Xavier Gabaix and Andrei Shleifer), decision theory (e.g. Efe Ok and Yusufcan Masatlioglu), experimental economics (e.g. Yoram Halevy and Florian Zimmerman), and revealed preference theory (e.g. John Quah and Mark Dean).

After opening positions were stated, the first morning involved Andrei Shleifer presenting his work with Pedro Bordalo, Nicola Gennaioli on “Memory, Attention, and Choice”. Following this behavioral model, Gerelt Tserenjigmid, presented an axiomatic model of “Choosing with the Worst in Mind: A Reference-Dependent Model” and Marianne Andries presented her work with Valentin Haddad on “Information Aversion”. The second session of the day involved Florian Zimmerman presenting experimental work with Benjamin Enke on a behavioral theme with work on “Correlation Neglect in Belief Formation”, followed by John Quah, presenting work with Matthew Polission and Ludovic Renou on “Revealed Preferences over Risk and Uncertainty,” and Kemal Yildiz on an axiomatic model of “Choice Regularities.” The final session of the first day involved Yusufcan Masatlioglu presenting “A Random Attention Model”, followed by Filip Matejka discussing new work on Rational Inattention, and Anne-Katrin Roesler presenting “Is Ignorance Bliss? Rational Inattention and Optimal Pricing.” To top off the first day, Drew Fudenberg presented his work with Phillip Strack and Tomasz Strzalecki on “Stochastic Choice and Optimal Sequential Sampling.”

The first day closed as it began with a discussion of the best ways forward. This was very lively, including fruitful exchanges between Fudenberg, Gabaix, Shleifer, Efe Ok, and Michael Woodford of Columbia and Emmanuel Farhi of Harvard, both of whom were in the audience.

The second day opened with Mark Dean presenting his joint work with Andrew Caplin and John Leahy on “Rational Inattention, Optimal Consideration Sets, and Stochastic Choice.” This was followed by Paulo Natenzon who spoke on “Random Choice and Learning” and Miguel Ballester who spoke on “Well-defined Stochastic Choice Models: The Case of Risk and Time Preferences” with Jose Apesteguia. Alvaro Sandroni then spoke on “The Consistency of Individual and Social Choices”, Xavier Gabaix presented his joint work with Emmanuel Farhi on “Optimal Taxation with Behavioral Agents”, and Sean Horan his joint work with Yves Sprumont on “Welfare Criteria from Choice: the Sequential Solution”. The final session of presentations involved Yoram Halevy presenting work with Lanny Zrill on “Parametric Recovery Methods: A Comparative Experimental Study” followed by Daniel Hojman presenting work with Jerry Green on “Monotonic Aggregation of Preferences and the Rationalization of Choice Functions.”

The conference closed as it began with discussions of the best way forward in researching bounds on rationality. There was broad agreement that the conference represented a fruitful step forward in understanding between representatives of the many different groups seeking to enrich classical models of choice. There was also a consensus that future work would need to be increasingly expansive in terms of the data that was considered as relevant to theories of choice, a point that was made forcefully by Paola Manzini and Marco Mariotti, who organized the very first conference on the theme of Bounded Rationality in Choice in 2013.

The full program of the conference can be found by clicking here. The conference was attended by more than 60 participants, including NYU faculty and students who engaged in stimulating discussions both during the presentations as well as during informal breaks. The complete list of participants and their affiliations are in the conference records maintained by the C.V. Starr Center for Applied Economics.