Christopher J. Tyson

Behavioral implications of shortlisting procedures

We consider two-stage “shortlisting procedures” in which the menu of alternatives is first pruned by some process or criterion and then a binary relation is maximized. Given a particular first-stage process, our main result supplies a necessary and sufficient condition for choice data to be consistent with a procedure in the designated class. This result applies to any class of procedures with a certain lattice structure, including the cases of “consideration filters,” “satisficing with salience effects,” and “rational shortlist methods.” The theory avoids background assumptions made for mathematical convenience; in this and other respects following Richter’s classical analysis of preference-maximizing choice in the absence of shortlisting.

Two-stage threshold representations

We study two-stage choice procedures in which the decision maker first preselects the alternatives whose values according to a criterion pass a menu-dependent threshold and then maximizes a second criterion to narrow the selection further. This framework overlaps with several existing models that have various interpretations and impose various additional restrictions on behavior. We show that the general class of procedures is characterized by acyclicity of the revealed “firststage separation relation.”

Satisficing behavior with a secondary criterion

Using the techniques of revealed preference analysis, we study a two-stage model of choice behavior. In the first stage, the decision maker maximizes a menu-dependent binary relation encoding preferences that are imperfectly perceived. In the second, a menu-independent binary relation is maximized over the subset of alternatives that survive the first stage. This structure can support various interpretations, including those of salience effects, positive action, and surface characteristics. We characterize the model behaviorally both in ordinal form and in terms of the corresponding numerical representations.

Privately-Optimal Severance Pay

Abstract This paper constructs an equilibrium matching model with risk-averse workers and incomplete contracts to study both the optimal private provision of severance pay and the consequences of government mandates in excess of the private optimum. The privately-optimal severance payment is bounded below by the fall in lifetime wealth resulting from job loss. Despite market incompleteness, mandated minimum payments significantly exceeding the private optimum are effectively undone by adjustment of the contractual wage, and have only small allocational and welfare effects.