Frame-dependent Random Utility

Paul H. Y. Cheung and Yusufcan Masatlioglu

Papers from arXiv.org

Abstract: We explore the influence of framing on decision-making, where some products are framed (e.g., displayed, recommended, endorsed, or labeled). We introduce a novel choice function that captures observed variations in framed alternatives. Building on this, we conduct a comprehensive revealed preference analysis, employing the concept of frame-dependent utility using both deterministic and probabilistic data. We demonstrate that simple and intuitive behavioral principles characterize our frame-dependent random utility model (FRUM), which offers testable conditions even with limited data. Finally, we introduce a parametric model to increase the tractability of FRUM. We also discuss how to recover the choice types in our framework.

Date: 2025-01
New Economics Papers: this item is included in nep-dcm, nep-mic and nep-upt
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