Filtering Down to Size: A Theory of Consideration

TL;DR

This paper develops a formal theory of how individuals form smaller consideration sets from menus, extending rational choice models to better explain observed filtering behavior in decision-making.

Contribution

It introduces axioms and properties for consideration filters, linking consideration sets to sequential choice and rational attention theories, and explores conditions for rationalizability.

Findings

Consideration filters can be characterized by specific axioms.

The model connects consideration sets with sequential choice and rational attention.

Conditions for utility rationalization under consideration-based decision-making are identified.

Abstract

The standard rational choice model describes individuals as making choices by selecting the best option from a menu. A wealth of evidence instead suggests that individuals often filter menus into smaller sets - consideration sets - from which choices are then made. I provide a theoretical foundation for this phenomenon, developing a formal language of axioms to characterize how consideration sets are formed from menus. I posit that consideration filters - mappings that translate a menu into one of its subsets - capture this process, and I introduce several properties that consideration filters can have. I then extend this core model to provide linkages with the sequential choice and rational attention literatures. Finally, I explore whether utility representation is feasible under this consideration model, conjecturing necessary and sufficient conditions for consideration-mediated choices to be rationalizable.