Revealed (P)reference theory

Efe A. Ok, Pietro Ortoleva, Gil Riella

    Research output: Contribution to journalArticle

    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.

    Original languageEnglish (US)
    Pages (from-to)299-321
    Number of pages23
    JournalAmerican Economic Review
    Volume105
    Issue number1
    DOIs
    StatePublished - Jan 1 2015

    ASJC Scopus subject areas

    • Economics and Econometrics

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  • Cite this

    Ok, E. A., Ortoleva, P., & Riella, G. (2015). Revealed (P)reference theory. American Economic Review, 105(1), 299-321. https://doi.org/10.1257/aer.20111046