A Theory of Ex Post Rationalization
Theoretical Economics
2022-03-21 v9
Abstract
People rationalize their past choices, even those that were mistakes in hindsight. We propose a formal theory of this behavior. The theory predicts that sunk costs affect later choices. Its model primitives are identified by choice behavior and it yields tractable comparative statics.
Cite
@article{arxiv.2107.07491,
title = {A Theory of Ex Post Rationalization},
author = {Erik Eyster and Shengwu Li and Sarah Ridout},
journal= {arXiv preprint arXiv:2107.07491},
year = {2022}
}