Reference Dependence and Random Attention
Theoretical Economics
2023-03-21 v3
Abstract
We explore the ways that a reference point may direct attention. Utilizing a stochastic choice framework, we provide behavioral foundations for the Reference-Dependent Random Attention Model (RD-RAM). Our characterization result shows that preferences may be uniquely identified even when the attention process depends arbitrarily on both the menu and the reference point. The RD-RAM is able to capture rich behavioral patterns, including frequency reversals among non-status quo alternatives and choice overload. We also analyze specific attention processes, characterizing reference-dependent versions of several prominent models of stochastic consideration.
Keywords
Cite
@article{arxiv.2106.13350,
title = {Reference Dependence and Random Attention},
author = {Matthew Kovach and Elchin Suleymanov},
journal= {arXiv preprint arXiv:2106.13350},
year = {2023}
}