Revealed Preference Analysis with Framing Effects

Jacob Goldin and Daniel Reck

No 25139, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In many settings, decision-makers' behavior is observed to vary based on 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: C1 D03 D60 (search for similar items in EconPapers)
Date: 2018-10
New Economics Papers: this item is included in nep-mic and nep-upt
Note: PE
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Published as Jacob Goldin & Daniel Reck, 2020. "Revealed-Preference Analysis with Framing Effects," Journal of Political Economy, vol 128(7), pages 2759-2795.

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