Psychological process models and aggregate behavior

This dissertation comprises of three independent essays which introduce novel psychologically inspired process models and examine their implications for individual, collective or market behavior. The first essay studies multi-attribute choice as a guided process of search. It puts forward a theoretical framework which integrates work on search and stopping with partial information from economics with psychological subjective utility models from the field of judgment and decision making. The alternatives are searched in order of decreasing estimated utility, until the expected cost of search exceeds the relevant benefits; The essay presents the results of a performance comparison of three well-studied multi-attribute choice models.The second essay reports the results of two experiments designed to understand how people revise their judgments of factual questions after being exposed to the opinion and confidence levels of others. It introduces a tree model of judgment revision which is directly derived from the empirical observations. The model demonstrates how opinions in a group of interacting people can converge or polarize over repeated interactions. The third essay, studies collective behavior in markets for search products. The decision makers consider the alternatives in order of decreasing popularity and choose the first alternative with utility higher than a certain satisficing threshold. The popularity order is updated after each individual choice. The presented framework illustrates that such markets are characterized by rich-get-richer dynamics which lead to inequality in the market-share distribution and unpredictability in regard to the final outcome.