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Optimize, satisfice, or choose without deliberation? A simple minimax-regret assessment

Abstract

Simon (Q J Econ 69:99–118, 1955) introduced satisficing, but he did not provide a precise definition or analysis. Other researchers have subsequently interpreted satisficing in various ways, but a consensus perspective still has not emerged. This paper interprets satisficing as a class of decision strategies that a person might use when seeking to optimize in a setting where deliberation is costly. Costly deliberation lies at the heart of Simon’s motivation of satisficing, but he did not formalize the idea. I do so here, studying decision making as a problem of minimax-regret planning in which costly deliberation enables a person to reduce ambiguity. I report simple specific findings on how the magnitude of deliberation costs may affect choice of a decision strategy.

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Acknowledgements

I have benefitted from the comments of John Hey, Jörg Stoye, Max Tabord-Meehan, Alex Tetenov, and three reviewers.

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Correspondence to Charles F. Manski.

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Manski, C.F. Optimize, satisfice, or choose without deliberation? A simple minimax-regret assessment. Theory Decis 83, 155–173 (2017). https://doi.org/10.1007/s11238-017-9592-1

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  • DOI: https://doi.org/10.1007/s11238-017-9592-1

Keywords

  • Satisficing
  • Bounded rationality
  • Costly deliberation
  • Decision under ambiguity
  • Minimax regret