Reference dependence and random attention

Matthew Kovach and Elchin Suleymanov

Journal of Economic Behavior & Organization, 2023, vol. 215, issue C, 421-441

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. We then analyze specific attention processes, characterizing reference-dependent versions of several prominent models of stochastic consideration. Our analysis illustrates which attention processes can accommodate behavioral patterns commonly observed in studies, such as frequency reversals among non-status quo alternatives and choice overload.

Keywords: Random choice; Status quo bias; Stochastic consideration (search for similar items in EconPapers)
JEL-codes: D01 D11 (search for similar items in EconPapers)
Date: 2023
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Working Paper: Reference Dependence and Random Attention (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:215:y:2023:i:c:p:421-441

DOI: 10.1016/j.jebo.2023.09.020

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