Reference-dependent choice under plurality rule

Hassan Nosratabadi

Mathematical Social Sciences, 2022, vol. 115, issue C, 88-98

Abstract: We study a model of choice where inferior alternatives may act as reference points that influence the appeal of those that are superior. In contrast to the current literature, the model allows reference points to jointly influence choice. In particular, facing multiple reference points, we assume that the decision-maker uses plurality rule. We show that, as long as inferiors only break ties between superiors rather than reversing the choice between them, the model retains a strong connection to rational choice. More precisely, it is proved that the model is characterized by a “single-step” relaxation of an inductive decomposition of the weak axiom of revealed preference.

Keywords: Reference-dependence; Revealed preference theory; The decoy effect; WARP decomposition (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:115:y:2022:i:c:p:88-98

DOI: 10.1016/j.mathsocsci.2021.10.008

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