Abstract
A variety of empirical findings suggest that in choice problems where deferral is also an option, the structure of the set of feasible alternatives may well influence the value that the decision maker attaches to the act of deferring choice, thereby giving rise to seemingly "irrational" mode of choice behavior. To accommodate this phenomenon, we propose a model of choice over risky prospects that restricts the classical rationality axioms solely to those instances in which the decision maker does not defer. We show that under weak assumptions, the implied behavior can be represented as if the value of deferring choice from a given set of options is determined by an affine utility function over choice sets which can be written as the aggregate, anticipated utility associated with how the agent might behave upon deferral, depending on the realization of subjective states. We relate the associated "anomalies" to the forms of the aggregator, characterize those cases in which the aggregator can be considered as an expectation operator (across subjective states), and examine the extent of uniqueness of the representations. Our theory is also applicable to choice problems with an outside option. In this context, the model explains the notion of "choice avoidance" by relating it to anticipated regret, and subsumes the classical model as the particular case in which the decision maker does not expect to experience regret.