The focal Luce model with status Quo

Makoto Hagiwara ()
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Makoto Hagiwara: Osaka University of Economics

Economic Theory Bulletin, 2024, vol. 12, issue 1, No 9, 107-117

Abstract: Abstract We consider stochastic choice problems. The “attraction effect” is a commonly observed and attested behavioral bias in experimental and empirical studies. For stochastic choice problems, we propose a model incorporating this effect in addition to status quo bias and compromise effect, which we call the “Focal Luce Model with Status Quo” (FLM-SQ). In the FLM-SQ, the decision-maker is only drawn to alternatives that are better than the status quo alternative, and focal alternatives are relatively more likely to be chosen. We characterize the FLM-SQ in terms of four properties.

Keywords: Stochastic choice problem; Focal Luce model; Status quo; D11; D91 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s40505-024-00266-w

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