Regret, responsibility, and randomization: A theory of stochastic choice

Abstract

I provide a model of deliberate stochastic choice over acts (state-contingent payoffs). In this model, the decision maker finds randomization desirable since it reduces responsibility and regret after the state uncertainty resolves. I provide an axiomatic characterization of stochastic choices compatible with this model. I also discuss the comparative statics and some behavioral implications of the model and outline potential avenues for extending and generalizing the model.

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