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Reference Dependence and Random Attention

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  • Matthew Kovach
  • Elchin Suleymanov

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. The RD-RAM is able to capture rich behavioral patterns, including frequency reversals among non-status quo alternatives and choice overload. We also analyze specific attention processes, characterizing reference-dependent versions of several prominent models of stochastic consideration.

Suggested Citation

  • Matthew Kovach & Elchin Suleymanov, 2021. "Reference Dependence and Random Attention," Papers 2106.13350, arXiv.org, revised Mar 2023.
    • Handle: RePEc:arx:papers:2106.13350
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    More about this item

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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