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This paper modifies the standard preference framework to incorporate post-decisional cognitive dissonance. It focuses on the “sour grapes ” aspect of post-decisional cognitive dissonance, where preferences and even perceptions are altered due to the process of dissonance reduction. First, we propose axioms which introduce cognitive dissonance into the standard rational choice framework. From this, we derive a model that illustrates the basic principles of dissonance. Then, the model is “reality checked ” against previous studies which have looked at dissonance to see if it produces the observed results. Next, the model is translated into utility terms and applied to a budget constrained choice situation. The model is then applied to explain the following observed phenomena: the “foot-in-the-door ” method of inducing compliance; habit formation and the evolution of cooperation oriented norms; the high returns that can be obtained by switching jobs during one’s career; and the long term detrimental effects to introducing monetary incentives for “intrinsically motivating ” activities like social service. Finally, we generalize the model to account for some additional phenomena that cannot be explained by the basic model.
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