Referential revealed preference theory

Arbeitspapier

References can influence choice. One of the well-studied cases is when a decoy is added to the menu. However small in magnitude, decoy effect violates the weak axiom of revealed preferences (WARP). In order to explain the small deviation from the classical revealed preference theory, I decompose WARP into independent axioms in order to only remove the ones which are inconsistent with the this effect. This minimal deviation produces the referential revealed preference theory that keeps the strong predictive power offered in the classical theory while explaining the referential effect.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2017-07

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Theory ; Criteria for Decision-Making under Risk and Uncertainty
• Subject: Reference-Dependent Choice ; Reference Preferences ; Decoy Effect ; Attraction Effect ; WARP Decomposition

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Nosratabadi, Hassan
• Event: Veröffentlichung
• (who): Rutgers University, Department of Economics
• (where): New Brunswick, NJ
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/200263
• Last update: 10.03.2025, 11:45 AM CET