Frame-dependent Random Utility
Theoretical Economics
2025-02-04 v1
Abstract
We explore the influence of framing on decision-making, where some products are framed (e.g., displayed, recommended, endorsed, or labeled). We introduce a novel choice function that captures observed variations in framed alternatives. Building on this, we conduct a comprehensive revealed preference analysis, employing the concept of frame-dependent utility using both deterministic and probabilistic data. We demonstrate that simple and intuitive behavioral principles characterize our frame-dependent random utility model (FRUM), which offers testable conditions even with limited data. Finally, we introduce a parametric model to increase the tractability of FRUM. We also discuss how to recover the choice types in our framework.
Cite
@article{arxiv.2502.00209,
title = {Frame-dependent Random Utility},
author = {Paul H. Y. Cheung and Yusufcan Masatlioglu},
journal= {arXiv preprint arXiv:2502.00209},
year = {2025}
}