Pairwise normalization: A neuroeconomic theory of multi-attribute choice.

We present a theory of multi-attribute choice founded in the neuroscience of perception. Valuation is formed through a series of pairwise, attribute-level comparisons implemented by (divisive) normalization — a form of relative value coding observed across sensory modalities and in species ranging from honeybees to humans. Such “pairwise normalization” captures a broad range of behavioral regularities in multi-attribute choice, including the compromise and asymmetric dominance effects, the diversification bias in allocation decisions, and majority-rule preference cycles.