American Economic Review Vol. 105 No. 1 2015

Revealed (P)Reference Theory

Efe A. Ok¹; Pietro Ortoleva²; Gil Riella³

¹ Department of Economics, New York University, 19 West 4th Street, New York, NY 10012 (e-mail: ) · ² Department of Economics, Columbia University, 420 West 118th Street, New York, NY 10027 (e-mail: ) · ³ Departamento de Economia, Universidade de Brasília, Campus Darcy Ribeiro, Brasília, DF 70910-900, Brazil (e-mail: ).

Abstract

This paper develops axiomatically a revealed preference theory of reference-dependent choice behavior. Instead of taking the reference for an agent as exogenously given in the description of a choice problem, we suitably relax the Weak Axiom of Revealed Preference to obtain, endogenously, the existence of reference alternatives as well as the structure of choice behavior conditional on those alternatives. We show how this model captures some well-known choice patterns such as the attraction effect.

DOI

10.1257/aer.20111046

Volume

105

Issue

1

Pages

299-321

Language

en

Sources

crossref bibtex:phds-export.bib openalex

Cite

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