Kıbrıs, Özgür and Masatlioglu, Yusufcan and Suleymanov, Elchin (2024) A random reference model. American Economic Journal: Microeconomics, 16 (1). pp. 155-209. ISSN 1945-7669 (Print) 1945-7685 (Online)
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Official URL: https://dx.doi.org/10.1257/mic.20220089
Abstract
We provide two nested models of random reference-dependent choice in which the reference point is endogenously determined by random processes. Random choice behavior is due to random reference points, even though, from the decision-maker’s viewpoint, choices are deterministic. Through a revealed preference exercise, we establish when and how one can identify the reference-dependent preferences and the random reference rule from observed choice data. We also present behavioral postulates that characterize the empirical content of our models. Lastly, we investigate an application of our model to Bertrand competition with differentiated products.
| Item Type: | Article |
|---|---|
| Divisions: | Faculty of Arts and Social Sciences |
| Depositing User: | Özgür Kıbrıs |
| Date Deposited: | 09 Jun 2024 16:54 |
| Last Modified: | 09 Jun 2024 16:54 |
| URI: | https://research.sabanciuniv.edu/id/eprint/49205 |
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A random reference model. (deposited 02 Oct 2023 15:58)
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