Revealed-preference analysis with framing effects

Jacob Goldin and Daniel Reck

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In many settings, decision makers’ behavior is observed to vary on the basis of seemingly arbitrary factors. Such framing effects cast doubt on the welfare conclusions drawn from revealed-preference analysis. We relax the assumptions underlying that approach to accommodate settings in which framing effects are present. Plausible restrictions of varying strength permit either partial or point identification of preferences for the decision makers who choose consistently across frames. Recovering population preferences requires understanding the empirical relationship between decision makers’ preferences and their sensitivity to the frame. We develop tools for studying this relationship and illustrate them with data on automatic enrollment into pension plans.

JEL-codes: C10 D60 I30 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2020-07-01
New Economics Papers: this item is included in nep-mic and nep-upt
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Citations: View citations in EconPapers (4)

Published in Journal of Political Economy, 1, July, 2020, 128(7), pp. 2759 - 2795. ISSN: 0022-3808

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:101443

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