Stochastic choice with bounded processing capacity

Abstract

We propose and characterize a class of stochastic decision functions for a decision-maker who has a capacity for processing at most k-alternatives at a time. When faced with a menu containing more than k alternatives, she randomly chooses a sub-menu of size k with uniform probability and selects the best alternative according to a strict ordering ≻. For smaller menus, she chooses the best alternative according to ≻.