Behavioral Social Neuroscience and Economics Seminar

Abstract: We propose a theory of multi-attribute choice with foundation in the neuroscience of sensory perception. The theory relies on within-attribute pairwise comparisons by means of divisive normalization, a neural computation widely observed across many sensory modalities and species. The theory captures and unifies a range of phenomena observed in the empirical literature, including the asymmetric dominance effect, the compromise effect, the similarity effect, "majority rule" transitivity violations, attribute-splitting effects, and comparability biases. Our analysis also demonstrates how pairwise attribute normalization can implement diminishing sensitivity (i.e. Weber's Law), revealing a link between our theory and the previously-established concept of attribute salience found in the economics literature. Furthermore, a general formulation of our theory contains some canonical microeconomic preference representations as special cases, including CES (constant elasticity of substitution) and Cobb-Douglas utility.